MARKET SURVEY: Q3 Bunker Hub Demand Jumps by 4.7% on Year With Red Sea Diversions

2024's total is heading for a 3.4% gain from 2023 and the highest level since 2019. Image Credit: Ship & Bunker

    •  4.7% average advance in Q3 2024 vs Q3 2023
    •  Q3 volumes see 1.2% rise from Q2 2023
    •  Container-focused ports see strongest gains
    •  Read the full report here: shipandbunker.com/bi/bunker-volumes

Demand at key marine fuel hubs jumped on a yearly basis in the third quarter of 2024, according to the latest market survey of bunker sales volumes in 17 leading global locations.

As in previous quarters, Ship & Bunker and consultancy 2050 Marine Energy surveyed bunker market participants around the world alongside official data where available and found an average rise of 4.7% in volumes in the third quarter from the same period of 2023. The year-on-year gain compares with a 1.9% year-on-year advance in the second quarter. Q3 volumes sequentially were 1.2% higher than in Q2.

The survey covers about 60% of the global demand total shown by official IMO data.

Assuming the same rate for the whole of the year as seen in the first three quarters, 2024's total is heading for 142.9 million mt, up by 3.4% from 2023 and the most since 2019.

2050 Marine Energy's Adrian Tolson sees the impact from the Red Sea situation remaining the main factor keeping the market buoyant.

"This quarter's figures continue to show the 2024 trend of increased demand in many major supply locations, largely as a result of continued disruption in the Suez Canal," Tolson said.

"This is obviously the main driver in supply locations such as West Africa and the Canary Islands.  

"In addition, this growth is notable in Asia (except for Japan) with major supply locations benefiting from Suez disruption and more controversially from sanctioned crude and increased supply moving east.  

"In the Americas only New York appears to be showing growth, another beneficiary of longer sea routes with an assist from increased cargo activity generated by threatened strikes and sanctions."

Mediterranean Market Remains Under Threat

With the Houthi attacks now having gone on for most of a year, more fixed plans are in place for how to deal with them, with fewer companies now uncertain over whether or not a voyage will involve Suez before it begins. 

The Mediterranean has been one of the largest victims of this effect, Alpha Trading's Giampaolo Gargiulo told Ship & Bunker.

"The Mediterranean has seen a substantial decrease in traffic, particularly from the Far East. Vessels from that region, compelled to navigate around the Cape of Good Hope to minimize transit times, either made stops at ports just outside the Mediterranean before returning or continued directly to Northern Europe," he said.

"This led to a significant reduction in port calls and, consequently, a decline in bunker demand, impacting the entire logistics and commercial system, effectively regionalizing the Mediterranean.

"Looking ahead to 2025, the marine bunkering market in the Mediterranean is poised for significant transformations, influenced by the forthcoming establishment of the Emission Control Area (ECA) set to take effect on May 1, 2025.

"The growing demand for alternative fuels, such as LNG and biofuels, presents a substantial opportunity for bunker suppliers."

Uncertain 2025 Outlook

The outlook for 2025 looks uncertain.

As of the end of 2024, Houthi attacks in the Red Sea and Gulf of Aden show no signs of stopping, meaning increased demand from diversions away from these areas is likely to remain a factor for the rest of the year -- although a rapid ceasefire deal in Gaza bringing an end to these attacks cannot be ruled out.

But transit levels though the Panama Canal appear to be normalising much more quickly, which should ease pressures on the container segment and lower demand.

"If, as expected, these trends continue for the balance of the year then 2024 should be a banner year setting some notable demand records and more unfortunately increases in CO2 emissions," Tolson said.

At the start of next year, the threat of a port strike in the US looks set to become a major factor setting the direction of the market, and the duration of any potential strike would be critical in determining the impact.

The effect of the incoming Trump Administration on global trade will also be crucial, with the extent of new tariffs on Chinese exports a key detail. Any change in sanctions on Iran or Russia could also have profound implications for fuel oil markets.

Methodology

As with the previous surveys the areas covered by the survey are Singapore, the Amsterdam-Rotterdam-Antwerp (ARA) hub, Fujairah, the US Gulf, South Korea, Russia, the Gibraltar Strait, Hong Kong, Panama, Zhoushan, Japan, New York, West Africa, South Africa, the Canary Islands, Los Angeles/Long Beach and Turkey. Data is sourced from a combination of market participants and official records.

The full breakdown of the survey results including sales volumes in each bunkering region for Q3 2024 and 2023 is available by clicking here.