VIEWPOINT: Bleak Prospects for Bunker Industry at Start of 2026

2026 is off to a perilous start for the bunker industry. File Image / Pixabay

At the start of the new year, the bunker industry is facing a convergence of significant issues that are likely to hold back its profitability for at least the first half of 2026.

Weak margins, rising GHG compliance costs, limited growth in alternative fuel markets, geopolitical risk and sanctions issues are coming together to paint a picture of a highly uncertain start to the year.

While the situation is not at crisis point yet, with firms still expanding in certain geographical areas, few in the industry are going into 2026 with a rosy outlook.

Margins and Volumes Under Pressure

The main problem for the industry at the start of the year is a lack of market growth meaning more competition over existing volumes, keeping margins under sustained pressure.

Bunker volumes are being held back by shaky global economic growth, combined by strong incentives from environmental regulation for shipping companies to reduce bunker consumption where possible. 

Ship & Bunker and 2050 Marine Energy's latest quarterly bunker volumes survey showed global volumes on track for a 1.9% increase last year, based on the first three quarters, still not surpassing the total seen in 2019 before the COVID-19 pandemic hit. 

Container line AP Moller-Maersk's first three quarters of reports show 2025 volumes heading for a fall of 3.4% on the year to the lowest level since 2023. Bunker consumption per container per nautical mile averaged 35.7 g/TEU*nm in Q1-Q3, down by 4.3% from 2024's level and down from 39.5 in 2023, 41.9 in 2022 and 41.4 in 2021.

Data from World Fuel Services paint a similar picture. The US-listed fuels firm saw 2025 sales down by 6.3% on the year, based on the first three quarters, and heading for the lowest annual total since at least 2014. Gross marine profit per tonne of bunkers delivered was up 11.8% on 2024's total at $10.53/mt in Q1-Q3, but still well below the levels seen in the previous years.

The drive towards digitalisation of the bunker industry has also reduced the effort needed for shipping firms using bunker procurement platforms to receive competing offers for their stems, putting downward pressure on margins, while widespread sanctions have also reduced the total size of the market that mainstream international suppliers can service. 

Geopolitical Factors

The market is also hostage to a series of increasingly unpredictable geopolitical scenarios.

Much of the weakness in bunker demand over the past year can be put down to trade tensions following the change of government in the US as the new Trump Administration focused on deploying tariffs with a view to bringing more production to the US.

This has resulted in a slowdown in international trade, with US ports in particular seeing an ensuing drop in bunker sales.

The progress of the trade story in 2025 was far from linear, with tariff rates being sharply increased and decreased at various points in the year, and in 2026 the market is poised for more of the same. 

Three other more distant geopolitical possibilities are also hanging over the bunker market, each with the potential to be highly disruptive. A revival of Venezuela's oil industry under that country's new government, a change of government in Iran and an end to Russia's war in Ukraine - with sanctions being eased in both cases afterwards - while unlikely in the short term, all three could potentially bring a wave of new fuel oil supply to Western markets.

Finally, a more likely scenario is on the horizon in an end to diversions away from the Red Sea as Houthi attacks off Yemen come to a close. These diversions have artificially raised bunker demand for the past two years as ships took longer voyages around Africa to avoid Yemeni waters, and a gradual return to the use of the Suez Canal over the course of this year will have the opposite effect.

Of particular concern to bunker traders with this geopolitical uncertainty over the past year and into 2026 is that it has not delivered significant price volatility that would benefit their margins. In the past, headlines of the kind seen out of Iran and Venezuela in the first two weeks of January in particular would have been enough to deliver sharp moves in crude prices, but over the past year the oil market has developed a degree of news fatigue, with headline-driven price moves generally small in size and short-lived.

Rising GHG Compliance Costs Limit Effects of Lower Prices

The market is now expecting a sharp drop in crude and bunker prices in the first half of this year, driven both by global economic weakness and excess crude supply from OPEC+ members.

Historically, price moves of this kind would have left shipping companies less sensitive to bunker prices, helping to take pressure off margins for suppliers and traders.

But this year, the rapid scaling-up of GHG compliance costs means shipping companies are likely to see little overall reduction in marine energy-related costs despite lower bunker prices.

As Ship & Bunker reported earlier this month, the full phasing-in of the EU Emissions Trading System this year, combined with a change in emissions factors, means shipping may be in for an increase of as much as 72.6% in EU-ETS costs per tonne of intra-EU VLSFO consumption in 2026 compared to the previous year.

That compares to a forecasted 22.4% year-on-year drop in the average Rotterdam VLSFO price this year.

This means bunker buyers at Rotterdam can expect a combined bunker and EU-ETS cost of $689.30/mt for VLSFO in 2026, $642.60/mt for HSFO and $813.78/mt for MGO. The total cost for VLSFO is up by 4.2% on the year, HSFO up by 6.4% and MGO down by 4.4%.