Bunker Fuel Market Size, Share, Opportunities, COVID-19 Impact, And Trends By Type (High Sulphur, Low Sulphur, Marine Gas Oil, Others), By Vessel Type (Bulk Container, General Cargo, Tankers, Others), And By Geography - Forecasts From 2022 To 2027

The bunker fuel market is expected to grow at a compound annual growth rate of 5.82% over the forecast period to reach a market size of US$169.84 billion by 2027 from US$114.227 billion in 2020.

Bunker fuel generally refers to the heavy oil used on ships which is the by-product of crude oil. It has been pivotal in running up the ships for passenger transportation, containers, and special-purpose ships for a substantial period. The stable increase in the demand for bunker fuel can be attributed to the spike in demand for transport and cargo deliveries. These are the things that are inevitable across the industry verticals. The demand for the bunker fuel can be pegged to the demand with the sale of the bunkers, which is expected to remain stable.

With the advancements in fuel technology, the market outlook for the traditional bunker fuel extracted from crude is expected to restructure as there remain concerns about its emissions in the environment. International Maritime Organisation (IMO) has expressed concerns regarding the negative impact of sulfur dioxide on the environment as it could result in disturbing flora and fauna and developing chronic lung and respiratory diseases. Thus, it aims to put a ceiling on sulfur emissions by cutting the use of bunker fuels in ships.

Asia Pacific port-intensive nations such as China, Hong Kong, Singapore, and South Korea, Dubai in the Middle East remain the prominent destination for oil-producing firms to locate their facilities. In China, major ports such as Guangzhou, Ningbo -Zhousan, Shanghai, Shenzen, and others have lucrative demand potential with the increasing number of vessels, cargo ships, and passenger boats which require frequent bunker fuel refills to carry out operations. Similarly, Busan in South Korea, Los Angeles in the US, Rotterdam in the Netherlands, and Europe. The other regions to explore the demand opportunities for bunker fuel remain in the port cities of Brazil, India, Indonesia, Japan, Malaysia, and Taiwan.

An increase in shipping due to trade volume leads to the growth of the bunker fuel market

In the long run, the increase in the trade volumes of the global shipping industry across the various industry verticals, for instance, refrigerated cargos for food industry products, container ships for machinery, automobile carriers, and others, are leading to the increase in the demand for the bunker fuels. However, there have been changes in the type of bunker oil used by the International Maritime Organization.  The organization has expressed interest in the capping of sulphuric emissions from 3.5% to 0.5%. Due to this, the ship owners are now looking at alternatives for bunker fuels or fuels with very low sulphuric content. Furthermore, the usage of ships and the demand for fuel has also been triggered by globalization which has integrated and strengthened global trade with resilience over ships. However, the industry is expected to be on revival from the influence of the COVID-19 pandemic at a relatively faster rate. As per data by UNCTAD, the global maritime trade took declined by 4.1% in 2020 due to an unexpected shutdown in economic activities, which further led to a downfall in demand for bunker fuel in the short term. The demand for bunker fuel has been anchored to the growth of the global shipping industry, which will lead trade and economic activities at the global level to sustainable revival. UNCTAD has projected the recovery for the shipping industry to follow by 2021 with an expansion of 4.8%; with this, we can expect the demand for low sulphuric content bunker fuel to go up.

Challenges to the Bunker Fuel Market

The bunker fuel market has remained under the strain of multiple challenges regarding compliance, the threat to the environment, volatile pricing, and frequent leakages and spills in the water bodies.   The change in the compliance rules by IMO has brought turbulence to the market, which may turn up the production process upside down within the industry.  This may seem like a detrimental move to the market, leaving it with the solution to produce very low sulphuric content products or be compatible with alternative products.  With these changes in place, fuel additives can optimize the impact of enabling a cold and clean emission flow. However, this also cannot be regarded as the ideal source for propelling the ships as the emissions, even from the low sulphuric and other accepted grades, remains perilous to mankind and the environment, which might lead to a drastic decline in the demand for the fuel limited only to specific industrial purposes under controlled circumstances. Apart from these, the oil spills and leakages in the oceans have caused the wipeout of aquatic flora and fauna.  With these challenges, the bunker fuel industry is expected to develop clean fuel, which can be LNG or Bio LNG, to be used within the shipping industry. 

Recent Development

Titan LNG won the tender for the delivery of LNG to Corsica Linea’s new Ro-Pax LNG-fueled ferry in the Port of Marseille in January 2022. This agreement signals Titan LNG’s growth into the Mediterranean, which will increase LNG, bio-LNG, and, in the long run, hydrogen-derived LNG availability in the region.

Minerva Bunkering began selling marine fuels in Saudi Arabia’s Red Sea ports of Yanbu and Jeddah in December 2021. Mercuria Energy Group owns the company, which collaborates alongside Aramco Trading as well as the Saudi Arabian Energy Ministry.

COVID-19 Impact on Bunker Fuel Market

Under the COVID-19 pandemic, bunker oil has low demand as the maritime industry as a whole has taken a sudden brunt which got aggravated with the limits on sulphuric emission notification from IMO. For instance, the volatility in the oil market can be gauged with the Oil Volatility Index, which has observed a decline in the level of oil prices tracing all-time lows. The bunker fuel market under the pandemic went fragmented as the supply chain was disrupted. There was a lack of availability and logistical support among the oil reserves. The impact on the producers’ side has been more severe than on the demand side as the fall in oil prices has taken down the bunker oil prices. However, OPEC nations have taken action towards the stockpile situation by reducing crude production to 9.3 million barrels per day with effect from May 2020, which may lead the prices for crude and related products such as bunker oil up.

Bunker Fuel Market Scope:

Segmentation

• By Type
  • High Sulphur
  • Low Sulphur
  • Marine Gas Oil 
  • Others 
• By Vessel type
  • Bulk Container
  • General Cargo
  • Tankers
  • Others
• By Geography
  • North America
    • United States
    • Canada
    • Mexico
  • South America
    • Brazil
    • Argentina
    • Others
  • Europe
    • Germany
    • Italy
    • France
    • Spain
    • United Kingdom
    • Others
  • Middle East and Africa
    • Saudi Arabia
    • UAE
    • Israel
    • Others
  • Asia Pacific
    • China
    • Japan
    • India
    • South Korea
    • Singapore
    • Malaysia
    • Thailand
    • Indonesia
    • Others

Frequently Asked Questions (FAQs)

Q1. What is the size of the global bunker fuel market?
A1. Bunker Fuel Market was valued at US$114.227 billion in 2020.  

Q2. What will be the bunker fuel market size by 2027?
A2. The bunker fuel market is expected to reach a market size of US$169.84 billion by 2027. 

Q3. What are the growth prospects for the bunker fuel market?
A3. The global bunker fuel market is expected to grow at a CAGR of 5.82% over the forecast period. 

Q4. What factors are anticipated to drive the bunker fuel market growth?
A4. The stable increase in the demand for bunker fuel can be attributed to the spike in demand for transport and cargo deliveries.

Q5. How is the global bunker fuel market segmented?
A5. The global bunker fuel market has been segmented by type, vessel type, and geography.