Red Sea tanker diversions could tighten bunker supply at alternative ports: Peninsula

Marine fuels supplier Peninsula has warned that Asia-bound oil tankers in the Red Sea diverting from the Bab al-Mandeb Strait exit could tighten supply at alternative bunkering locations due to increasing demand.

IMAGE: Oil products tanker moored at the Port of Gibraltar. Getty Images

As Red Sea hostilities by the Houthis increase, Asia-bound oil tankers are re-routing from the regular Bab al-Mandeb eastbound exit to sail through the Suez Canal, into the Mediterranean and then around the Cape of Good Hope towards their destinations.

Consequently, Peninsula anticipates bunker demand to increase on some ports on the alternative routes, including Port Said, Malta, Gibraltar, Algeciras, Las Palmas, Algoa Bay and Port Louis.

The bunker supplier said these diversions could more than double the tonne-mile demand (the cargo's weight multiplied by how far it travels), compared to that of a Bab al-Mandeb eastbound exit.

Peninsula expects that for a typical Suezmax tanker, the re-routing will demand around 1,500 mt of additional fuel, at an estimated cost of $800,000, and emit 3,800 mt of additional CO2.

Suezmax vessels are the largest tankers that are able to transit the Suez Canal when fully laden. Spot rates for renting such vessels are also increasing as companies are hurrying to grab ships before the extra tonne-mile effect is seen, Peninsula said.

Additionally, Peninsula noted that the 0.1% sulphur emissions requirement in the Mediterranean Emissions Control Area will require vessels to shift to compliant fuels like LSMGO or biofuels while cruising through the region. Failure to secure these fuel grades could lead to penalties and vessel detentions.

“The industry could be dealing with a sudden, significant increase in fuel consumption. This is more complex than simply plotting a longer course – it will require a fundamental recalibration of voyage economics that will squeeze global bunker supply at a time when demand already outstrips supply,” Peninsula’s Chief Operations Officer Kenny MacLean said.

By Nachiket Tekawade

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