Strong month expected for Gulf bunkers after Red Sea rerouting
Quantum Commodity Intelligence – Logistical challenges caused by security risks on the Red Sea are driving demand for vessel bunkering in other parts of the Middle East, with strong demand expected to be seen in Fujairah through the first half of the year.
Voyages rerouting away from Yemen's coast to avoid potential attack from Houthi militants have already shaken up global bunkering demand, with higher wait times in key bunkering hubs coming as longer sailing times at higher speeds have driven up fuel consumption.
That trend is expected to continue through the month, according to Sean Burgin, Middle East Purchasing Manager, Senior Sourcer at Glander, speaking at the Middle East Bunkering Convention in Dubai.
"The war has changed demand. Since January, we have seen some very large stems come into the market," Burgin said.
Demand has been moved away from ports on the Red Sea as vessels avoid the area, with regional alternatives such as Djibouti, Port Said and Yanbu set to see falling sales.
Refinery upgrades and openings have helped increase the regional supply of bunker fuels in the Middle East, which typically trade at a discount to Singapore.
"We forecast a strong Q1 and Q2… Refinery upgrades and expansion have increased about 700kb ,meaning 11mbpd of capacity in the Middle East – mainly in Oman, Iraq and Al Zour in Kuwait. That is helping to drive bunker demand in the region," Burgin said.
Strong January bunkering demand in Fujairah is expected to build on a rebound in December sales, which were driven by marine fuel 0.5% sulfur. January bunker sales from Fujairah are set to be released in the middle of the month.
That comes against a backdrop of a slower headline figure for 2023 at Fujairah, with some sales shifting to Singapore, the world's largest bunkering hub. However, some of the sales are likely remaining in the UAE away from Fujairah.
"Fujairah sales were down 7-8% last year. Some of that has been shifted to Khor Fakkan, which doesn't produce official figures," Burgin said.
That was echoed by Colin Holloway, Global Head - Technical at bunker supplier Cockett, who added, "There is about 100-120kt per month of sales from Khor Fakkan, although it could even be more," said.
