Bunker Fuel Market Size, Share, Competitive Landscape and Trend Analysis Report, by Type, by Commercial Distributor by Application : Global Opportunity Analysis and Industry Forecast, 2024-2033

Key Market Dynamics

The growing demand for maritime transportation is a key driver in the bunker fuel market. As global trade expands, more goods are transported by sea, necessitating an increased number of ships and fuel consumption. With over 80% of the world's trade volume carried by maritime vessels, the need for efficient and reliable energy sources for these ships is paramount. Larger and more frequent shipping routes also contribute to the heightened bunker fuel demand. This rise is further accelerated by e-commerce growth and emerging markets, which require robust logistical networks supported by extensive maritime transport, thereby fueling the bunker fuel market's expansion.

The expansion in offshore oil and gas exploration significantly drives the bunker fuel market growth. As energy companies intensify their search for new resources, they deploy more exploration and support vessels, rigs, and platforms. These activities demand substantial amounts of bunker fuel to power operations, including transportation of personnel, equipment, and extracted resources. The remote and extended nature of offshore projects requires a continuous and reliable fuel supply, boosting bunker fuel consumption. This growth in demand is further amplified by the rise in global energy needs and the exploration of untapped offshore reserves, solidifying the market’s expansion.

However, the high cost of compliance with low-sulfur requirements significantly restrains the growth of the bunker fuel market. Regulations such as the IMO 2020 mandate, which limits sulfur content in marine fuels to 0.5%, compel ship operators to either switch to more expensive low-sulfur fuels or invest in costly exhaust cleaning technologies such as scrubbers. These expenses increase operational costs, reducing the affordability and attractiveness of traditional bunker fuels. Smaller shipping companies face financial strain, potentially leading to market contraction. The added cost burden also discourages investment in new vessels and fuels, slowing overall market expansion and innovation.

Government incentives for cleaner fuel use present a lucrative opportunity for the bunker fuel market by encouraging the adoption of low-sulfur and alternative fuels such as LNG and biofuels. These incentives, including tax breaks, subsidies, and grants, reduce the financial burden on shipping companies transitioning to eco-friendly fuels. As a result, there's an increased demand for compliant fuels and technologies that meet stringent environmental standards. This support accelerates market adoption of cleaner fuels, stimulates investment in new infrastructure and supply chains, and fosters innovation in fuel technology, ultimately expanding the market and enhancing its sustainability profile. All these factors are anticipated to offer new growth opportunities in the bunker fuel market forecast.

Market Segmentation

The bunker fuel market is segmented into type, commercial distributor, application, and region. By type, the market is categorized into high sulfur fuel oil, low sulfur fuel oil, marine gas oil, and others. By commercial distributor, the market is divided into oil majors, large independent, and small independent. Based on application, the market is segmented into bulk carrier, oil tanker, general cargo, chemical tanker, fishing vessels, gas tankers, and others. Region-wise, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

Pricing Analysis of Very Low Sulfur Fuel Oil (VLSFO)

In 2019, the price of VLSFO stood at $561.0 /metric ton, indicating a relatively high cost for compliant marine fuel compared to traditional bunker fuels. This was primarily driven by the transition period leading up to the implementation of the International Maritime Organization's (IMO) sulfur cap regulation, which required ships to use fuels with sulfur content not exceeding 0.5%. However, in 2020, the price of VLSFO dropped sharply to $357.5 /metric ton. This significant decrease was largely attributed to the COVID-19 pandemic, which led to a steep decline in global oil demand and prices. The economic downturn and reduced maritime activities resulted in a surplus of VLSFO supply, causing prices to plummet.

As the world gradually recovered from the pandemic in 2021, the price of VLSFO surged to $622.0 /metric ton. This increase reflected the rebound in oil demand and the continued implementation of IMO regulations, which drive demand for compliant fuels. By 2022, the price of VLSFO further increased to $714.0 /metric ton. This escalation is attributed to various factors, including geopolitical tensions, supply chain disruptions, and recovering global economic activity. In addition, ongoing efforts by the shipping industry to comply with environmental regulations continued to support demand for VLSFO. Moreover in 2022, the price of VLSFO slightly decreased in 2023, settling at $667.0 /metric ton. This fluctuation is influenced by market dynamics, changes in oil prices, and adjustments in supply and demand conditions.

Key Regulations

• IMO 2020 Regulation: Implemented by the International Maritime Organization (IMO) , this regulation mandates a significant reduction in sulphur emissions from ships by limiting the sulphur content in marine fuels to 0.5% (from the previous limit of 3.5%) , unless ships are equipped with exhaust gas cleaning systems (scrubbers) .
• MARPOL Annex VI: Part of the International Convention for the Prevention of Pollution from Ships (MARPOL) , Annex VI sets limits on emissions of sulphur oxides (SOx) and nitrogen oxides (NOx) from ship exhausts, as well as prohibits deliberate emissions of ozone-depleting substances.
• North American ECA (Emission Control Area) : The North American Emission Control Area (ECA) enforces sulphur limits of 0.1% for marine fuels since 2012. This regulation is established under the U.S. Clean Air Act and the Canadian Vessel Pollution and Dangerous Chemicals Regulations, aiming to reduce sulphur oxide emissions and improve air quality in coastal and inland waters.
• California Air Resources Board (CARB) : The California Air Resources Board (CARB) enforces regulations under the California Code of Regulations, Title 13, Section 2299.1. These regulations mandate strict emission standards for vessels, including requirements for low-sulphur fuels (CARB Diesel Rule) and use of emission control technologies (e.g., exhaust gas cleaning systems) to reduce air pollutants in California waters.
• Ballast Water Management Convention: The Ballast Water Management Convention (BWMC) , under IMO's Act BWM/CONF/36, mandates ships to manage their ballast water to prevent invasive species spread. It sets standards (Act BWM.2/Circ.70) for ballast water treatment and exchange, aiming to protect marine ecosystems from biological pollution.

Competitive Landscape

• The key market players in the bunker fuel market outlook include BP p.l.c., TotalEnergies, Neste, Shell Plc, Exxon Mobil Corporation., LUKOIL, Petroliam Nasional Berhad (PETRONAS) , Chevron Corporation., Hindustan Petroleum Corporation Limited, Indian Oil Corporation Ltd. and others.

Recent Key Strategies and Developments

• In February 2023, Shell Western LNG B.V (Shell) and Hapag-Lloyd announced a multi-year agreement for supplying liquefied natural gas (LNG) to Hapag-Lloyd’s ultra large dual-fuel container vessels exceeding 23, 500 twenty-foot equivalent unit (TEU) . Bunkering started in the second half of 2023 in the Port of Rotterdam. The ships operated on Europe-Far East routes, calling at Rotterdam, Hamburg, Singapore, and Shanghai.
• In November 2022, TotalEnergies expanded its global LNG bunkering network with the naming ceremony of the Brassavola LNG bunker vessel in Singapore. The event marked a milestone as the company continued to strengthen its infrastructure for liquefied natural gas bunkering worldwide.
• In June 2022, Shell and CMA CGM Group signed agreements to collaborate closely in accelerating the decarbonization of the marine sector. This included a multi-year liquefied natural gas (LNG) supply agreement, which supplied LNG to CMA CGM’s 13, 000 TEU vessels in the Port of Singapore from the second half of 2023.

Regional Market Outlook

In the Asia-Pacific region, the bunker fuel market's growth is propelled by several key factors. The region is a critical nexus for global maritime trade, with bustling ports such as Singapore, Shanghai, and Hong Kong serving as major refueling hubs for international shipping routes. The economic boom in countries such as China, Japan, and South Korea drives substantial maritime activity, increasing demand for bunker fuels. In addition, the strategic investments in port infrastructure and logistics capabilities enhance fuel supply efficiency. Regulatory shifts towards low-sulphur fuels further stimulate market dynamics, as the region adapts to stringent environmental standards while maintaining its role as a global shipping powerhouse.

• According to the Ministry of Shipping, around 95% of India's trading by volume and 70% by value is done through maritime transport. In November 2020, the Prime Minister, Mr. Narendra Modi renamed the Ministry of Shipping as the Ministry of Ports, Shipping and Waterways.

• According to the India Brand Equity Foundation, on March 15, 2024, The Ministry of Ports, Shipping and Waterways approved $77.79 million for 10 new waterways projects on the Brahmaputra in Assam, enhancing connectivity, boosting river tourism, and facilitating public commute, all under the Sagarmala programme. The approval of new waterways projects on the Brahmaputra in Assam is likely to increase regional demand for bunker fuel market share as enhanced connectivity and river traffic boost maritime and tourism activities.

Industry Trends

• The shift towards biodegradable and recycled plastics is gaining momentum, with materials such as PLA (polylactic acid) leading the way in sustainable solutions. PLA, derived from renewable resources such as corn starch, is increasingly used in packaging and consumer products due to its ability to decompose more quickly than traditional plastics. For instance, companies such as NatureWorks are producing PLA-based containers that help reduce environmental impact.
• The integration of Industry 4.0 technologies in injection molding involves using IoT and automation to enhance efficiency. Smart injection molding machines now feature sensors and data analytics that allow for real-time monitoring and optimization. For example, machines can detect and correct defects during production, improving quality and reducing waste. This technology boosts productivity and operational accuracy, revolutionizing the manufacturing process.

Key Sources Referred

• India Brand Equity Foundation
• Invest India
• Flexible Packaging Association
• Plastic Industry Association
• International Trade Administration

Key Benefits For Stakeholders

• This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the bunker fuel market analysis from 2024 to 2033 to identify the prevailing bunker fuel market opportunities.
• The market research is offered along with information related to key drivers, restraints, and opportunities.
• Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders make profit-oriented business decisions and strengthen their supplier-buyer network.
• In-depth analysis of the bunker fuel market overview and segmentation assists to determine the prevailing market opportunities.
• Major countries in each region are mapped according to their revenue contribution to the global market.
• Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
• The report includes the analysis of the regional as well as global bunker fuel market trends, key players, market segments, application areas, and market growth strategies.