Fuel Oil Market Guide

Residual fuel is traded principally as very low sulphur fuel oil (VLSFO, capped at 0.50% sulphur) and high sulphur fuel oil (HSFO, typically 3.50% sulphur), alongside low sulphur marine gasoil for stricter emission control areas.

Quality is defined by ISO 8217, which sets limits for viscosity, density, sulphur, water, ash, aluminium plus silicon, and stability. Compatibility between blends matters as much as headline sulphur: incompatible components can drop out as sludge in a vessel's fuel system.

Most VLSFO is a blend of residual streams with cutter stocks and distillates. The margin on a blend is the difference between the delivered value of the finished grade and the weighted cost of its components, less freight, storage and losses.

Because component availability differs by region, the same finished specification can be economic in one hub and uneconomic in another. That difference is what creates arbitrage cargoes.

Singapore is the largest bunkering hub and the reference point for Asian pricing. Rotterdam anchors European values, Fujairah serves Middle East and Indian Ocean routes, and Houston reflects US Gulf supply.

The spread between hubs, adjusted for freight, determines whether a cargo moves west to east or east to west. The VLSFO-HSFO spread, in turn, drives the payback on exhaust gas cleaning systems.

Watch refinery run rates and turnaround schedules for supply, stock levels at the main hubs for balance, and tanker freight for delivered economics. Demand tracks vessel calls, which follow dry bulk and container trade.

Our fuel oil trading and fuel oil shipping desks publish source-attributed coverage of these developments as they are announced.