Bunker Prices Shrug Off War Effect One Year After Ukraine Invasion

Most bunker prices are now lower than they were before the full invasion of Ukraine a year ago. Image Credit: Ship & Bunker

One year after the full Russian invasion of Ukraine began and drove a record surge in bunker prices, most grades of fuel are now consistently trading below the levels seen before the war started in earnest.

Russia's invasion of Ukraine on February 24, 2022 triggered a surge in energy markets on concerns of the supply implications of the West seeking to cut off Russian exports in response.

Ship & Bunker's G20-VLSFO Index of prices across 20 leading bunkering ports jumped by 47.5% from its level on February 23 to the record of $1,125.50/mt it reached on June 14 of last year.

But one year on from the invasion, and with no sign of the war stopping any time soon, most bunker prices are now at lower levels.

The G20-VLSFO Index stood at $633/mt on Thursday, down by 17% from its level a year earlier. The G20-HSFO Index was down by 22.3% on the year at $450.50/mt, while only the the G20-MGO Index was still showing modest gains, up by 2.1% on the year at $913/mt.

Prices at the top ports show a similar trend. As of February 23 Singapore's VLSFO price was down by 22.6% on the year, Rotterdam's by 22.2%, Fujairah's by 23.9% and Houston's by 17.1%.

LNG bunkers at Rotterdam had been the marine fuel market hit most starkly by the war, with fuel oil equivalent prices surging by 233.6% between February 23 and last year's record high of $3,660/mt on August 30. But as of the end of last week that price was also below its pre-war level, down by 28.4% on the year at $786/mt.

Why these numbers are mostly lower now than a year ago is a significant question hanging over the bunker industry.

A weaker economic outlook now than in early 2022 will be an important part of that picture.

But can it really be the case that the industry has largely phased out the previously large share of its fuel mix that came from Russia while still delivering lower prices?

Or are the buyers and sellers of marine fuel still dealing in roughly the same molecules as a year ago, quietly blended and relabelled as being of Latvian, Kazakh or other origins to avoid the attention of Western politicians?