Fuel Oil’s Rollercoaster

March 19th 2024:Global fuel oil trade is up, but long-term trend is down The March Oil Market Report from the IEA highlighted an increase in demand for bunker fuel due to the lengthening supply routes as a result of the Houthi attacks in the Red Sea. Key bunker ports like Singapore have seen bunker sales reach all-time highs. This increased demand for bunkers, in combination with some other factors, caused the IEA to make an upwards revision to their 2024 oil demand growth. The IEA raised global demand growth for 2024 to 1.3 Mb/d, up by 110,000 b/d compared to last month’s report. In this weekly opinion, we’ll take a look at the global trade in fuel oil and whether these recent increases can change the trend of long-term decline in demand or whether this is a temporary blip. Residual fuel oil is primarily used as bunker fuel for ocean going vessels, but it is also consumed in power plants and industrial boilers and sometimes as feedstock for refineries. Over the last 35 years, the use of fuel oil for power generation has sharply declined, both in absolute as well as in relative terms. Global demand peaked in 1990. Mainly for environmental reasons, many developed countries have increasingly replaced fuel oil with natural gas and, more recently renewables for power generation. This leaves marine bunkers as the dominant source of demand. Fill out below form to continue reading.