BUNKER PRICES: Tariff Tensions Send Global VLSFO Prices to 3 1/2-Year Low

Global VLSFO prices had been on a nine-day winning streak before dropping sharply on Thursday and Friday. Image Credit: Ship & Bunker

A sharp selloff in commodity prices at the end of last week following new announcements on tariffs sent global VLSFO prices to the lowest level in three and a half years.

Ship & Bunker's G20-VLSFO Index of prices across 20 leading bunkering ports lost $13.50/mt to $548.50/mt on Friday, reaching its lowest level since September 2021.

The Trump Administration announced widespread tariffs on imports from almost every country trading with the US late on Wednesday, raising the prospect of a significant slowdown in global trade. On Friday China announced a retaliatory 34% tariff on its imports from the US.

"We cautiously assess that we are approaching a market bottom, but the crisis has developed rapidly and unpredictably," hedging firm GRM said in an emailed note on Monday. 

"Worse yet, no one but Trump himself can halt the negative spiral—and Trump has not recognized the severity of the situation."

Friday's bunker prices will largely only reflect Thursday's moves in the wider oil market, meaning further sharp declines are likely as new pricing information comes in on Monday morning. 

The G20-HSFO Index sank by $13/mt to $482/mt, while the G20-MGO Index dropped by $21/mt to $735/mt.

ICE Brent crude futures fell by $4.56/bl to $65.58/bl on Friday, having fallen by $4.81/bl the previous day.

VLSFO prices at the top four ports followed a negative trend. At Singapore prices lost $21/mt to $515.50/mt, at Rotterdam they fell by $27/mt to $470.50/mt, at Fujairah they declined by $22/mt to $509.50/mt, and at Houston they sank by $20.50/mt to $502/mt.

On Monday morning Brent futures were trading down by $1.70/bl from the previous session's close at $63.88/bl as of 5:58 AM in London. In metric tonne terms that would be equivalent to a $12.80/mt fall on the day in bunker prices.

VLSFO price moves tend to lag rapid moves in the crude market as suppliers with hedging in place seek to resist pressure to lower their prices in line with crude futures. But those suppliers without hedging will be in a more vulnerable position, and buyers with optionality around where their vessels bunker will be looking out for these suppliers this week to find the lowest possible prices.