Singapore's prominence in global shipping is experiencing a surge as the turmoil in the Red Sea alters international trade routes, leading to increased fuel sales at one of the world’s busiest ports.
According to data from the port authority, fuel volumes in January saw a 12% rise compared to the previous year, marking the second consecutive month of significant growth as ships reroute to the Asian hub amidst the disruptions in the region.
Simon Neo, executive director of ship-refueling consultancy SDE International Pte, noted, “Demand in Singapore has surged as it serves as a crucial refueling stop before voyaging into the Indian Ocean.” He also suggested that alternative ports like Fujairah in the United Arab Emirates and Sri Lanka might be considered by rerouted vessels.
Recent months have witnessed a shake-up in global maritime trade dynamics due to the targeting of merchant vessels by Iran-backed Houthi rebels in Yemen, who support Hamas against Israel. Despite ongoing military actions by the US, many shipowners are avoiding the area altogether, opting for safer passages around the Cape of Good Hope instead of navigating through the Suez Canal.
These longer routes, coupled with some vessels increasing their sailing speeds, have led to a spike in bunker fuel consumption. Consequently, ships are topping up their fuel tanks at unconventional refueling ports along the African route, such as Durban and Walvis Bay, in addition to major hubs like Singapore.
Fotios Katsoulas, lead analyst for tanker shipping and alternative fuels at S&P Global Commodity Insights, commented, “Overall demand for bunkering is expected to rise due to the extended distances vessels need to cover. Estimates suggest this could increase by up to 5%, as more ships circumvent the Red Sea and accelerate to minimize the duration of their longer voyages.”
Singapore's overall marine fuel sales in January reached 4.9 million tons, marking a 12% increase, according to the Maritime & Port Authority. This uptick follows December's record-breaking volume of 5.1 million tons, the highest monthly figure since data collection began in 1995.
Reflecting the surge in demand, prices of low-sulfur marine fuel in Singapore, the predominant grade used, climbed to as high as US$671 ($903.73) per ton in January, representing a 10% increase compared to year-end levels. This contrasted with Brent crude's 6% gain over the same period, according to data from Clearlynx, a marine fuel procurement and analytics platform.