Euronav Sets Out 'Negative Impact' From Ukraine War Bunker Costs

The shipping industry is facing surging bunker bills. File Image / Pixabay

Tanker company Euronav has set out how the Russian invasion of Ukraine is affecting its business as its bunker costs surge.

The effect on bunker prices is cutting the profitability of its tankers, Euronav said in an earnings statement published on its website this week.

"The price of marine fuels has increased as a consequence of the conflict and is anticipated to remain elevated for the foreseeable future," the company said in the statement.

"This is due to Russia supplying bunker markets with 20% of the global fuel demand in HSFO, VLSFO and MGO markets.

"These price increases will negatively impact the cost structure of the vessels, making it more expensive to ship freight on long haul voyages.

"The spread between HSFO and VLSFO was at a high level pre-invasion, but has begun to correct as the removal of Russian origin HSFO from the market has begun to tighten up supplies in Europe and in the Mediterranean."

But this effect may be countered by increased overall demand for tankers.

"Due to the self-sanctioning being performed by oil traders, refiners, and shippers of Russian petroleum products, the market has evolved short term towards longer tonnage and different cargo specifications," the company said.

"The longer-term prognosis is that ton miles may increase due to the adjustment of trade flows to compensate refineries and markets for the lack of Russian oil flows.

"The Company has suspended its operations with Russian customers, which represents an insignificant portion of the Company's turnover (below 5%)."