The bunker fuel market is a key part of the industrial network around the booming global marine sector. Bunker fuel comprises a major part of the total expenditure of vassal operators and can account for up to three quarters of a ship’s total running expenses. The pricing dynamics of the bunker fuel market have thus become important for the overall marine sector, with ports offering bunker fuel at the lowest rates attaining significant economic positions. Moreover, the bunker fuel market is also closely linked to environmental protocol and regulations, as combustion of marine fuels leads to the emission of several pollutants, including nitrogen and sulfur oxides.
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According to Transparency Market Research (TMR), the global bunker fuel market is expected to rise to a total volume of 460 mn tons by 2020, exhibiting a steady 3.1% CAGR in the last six years of the ongoing decade.
Rising Offshore Oil and Gas Activities to Drive Bunker Fuel Market
One of the key drivers for the global bunker fuel market is the rising need for offshore exploration and extraction activities in the oil and gas sector. Mounting scarcity in onshore oil wells has led to a steady rise in offshore activities, particularly in the Atlantic Ocean and the North Sea. Established oil producing countries such as the U.S. have already made significant advances in the offshore petroleum sector, while the Middle East and Africa could also be a key market for bunker fuel due to the booming offshore petroleum sector in West Africa.
The rising government support to environmental measures, particularly the reduction in sulfur compounds used in marine lubricants and bunker fuel, is an influential factor for the global bunker fuel market. Bunker fuels contain significant amounts of sulfurous and nitrogenous compounds, the oxides of both of which have a significant adverse impact on the environment. Acknowledging the role of the growing marine trade in environmental pollution, several governments in Europe have maintained a supportive stance towards low-sulfur bunker fuel formulations. The rising density of marine trade around emission control areas (ECAs) is likely to make this a consistent driver for the global bunker fuel market.
Asia Pacific, Europe Likely to Dominate Global Bunker Fuel Market
Geographically, Asia Pacific is likely to play the leading role in the development of the global bunker fuel market in the coming years. Rising Asian ports such as Singapore are among the leading players in the global bunker fuel market and are likely to remain vital due to the rising trade of commodities and goods in Southeast Asia. Aggressive coastal expansion activity by China has also aided the Asia Pacific bunker fuel market.
Europe is also likely to remain important for the global bunker fuel market in the coming years, driven by rising activity in trade routes in the Mediterranean, Baltic, and North Seas. European governments have also taken proactive stances on environmental conservation, helping the Europe bunker fuel market exhibit robust growth. The rising offshore petroleum extraction activity in the North Sea also contributes to the Europe bunker fuel market.
By type of fuel, the global bunker fuel market is bifurcated into residual fuel and distillate fuel. Residual fuel is likely to account for more than three-quarters of the global bunker fuel market in the coming years thanks to the widespread demand for IFO 380 fuel oil. Intermediate fuel oils (IFO) are the dominant revenue generator in the global bunker fuel market, with IFO 380 and IFO 180 being the most popular fuel grades.
Leading players in the global bunker fuel market include World Fuel Services Corporation, Lukoil-Bunker LLC, Chemoil Energy Limited, and Gazpromneft Marine Bunker LLC.