OPIS Insights

The marine fuel landscape is rapidly evolving as pricing shifts, new technologies emerge, and regulatory frameworks tighten across global shipping corridors. A recent webinar hosted by OPIS and Chemical Market Analytics by OPIS explored these developments in detail, offering a comprehensive view of traditional bunker fuel dynamics, dual-fuel vessel trends, policy direction, and the expanding roles of methanol and ammonia in the maritime energy mix.

This blog post summarizes the core insights from each section of the discussion. If you wish to watch the full webinar, we have linked to the recording at the end of this post.

Marine Fuel Pricing: A Global Look at HSFO, VLSFO, and MGO Pricing and Market Dynamics

The session began with an overview of pricing for high-sulfur fuel oil (HSFO), very low-sulfur fuel oil (VLSFO), and marine gasoil (MGO), examining how market behavior has shifted across major regions.

United States: Houston and the Panama Canal

Demand in Houston has weakened, partly due to uncertainty surrounding tariffs. Smaller bunker stems, reduced container traffic, and intense supplier competition have significantly compressed margins. Many suppliers now rely on barging activities for revenue as fuel premiums remain flat or negative.

The HSFO–VLSFO spread has tightened dramatically, far below the levels anticipated when scrubber investments were rising. With most scrubbers already installed and paid back, the spread has settled into the $30–$50 per ton range.

Meanwhile, bunkering activity at the Panama Canal has recovered strongly from the 2023–24 drought that limited transits. Fuel volumes have returned to historic highs, with VLSFO remaining the dominant product and modest but notable contributions from alternative fuels such as biofuels and LNG.

Europe: Rotterdam and the Mediterranean Shift

Rotterdam has also experienced a narrowing HSFO–VLSFO spread, influenced by increased HSFO demand from rerouted voyages around the Cape of Good Hope. At one point in late 2024, the spread dipped as low as $7.50 per ton due to oversupply and soft VLSFO demand.

A major shift occurred in May 2024 with the Mediterranean Sulfur Emission Control Area (SECA), which imposed a 0.1% sulfur limit. This effectively elevated MGO to the primary fuel for the region, driving price increases that have become increasingly detached from crude movements.

Asia: Singapore’s Market Pressures and Supply Surges

Singapore saw a slight dip in bunkering volumes in September, attributed to more competitive pricing at neighboring ports and weather-related disruptions. Tariff impacts reduced long-haul cargo flows from Asia, suppressing bunker demand.

At the same time, frequent outages of units at the Dangote Refinery in Nigeria and Malaysia’s Pengerang Refining Company and Petrochemical Company released large quantities of VLSFO into the market. Additionally, the resumption of Sudanese crudes into the VLSFO market weakened prices. MGO availability tightened as more low-sulfur diesel in China was absorbed for industrial, mining, or potentially military uses.

The broader takeaway: the bunker market remains low-margin and globally interconnected, with price movements heavily influenced by refinery outages, geopolitics, and regional regulations. Despite the growth of new fuels, traditional products are expected to remain dominant until global legislation creates stronger uniformity.

 

Shifting Shipping Dynamics 

The next section examined how vessel technology and fuel options are reshaping operational and investment decisions in the shipping sector.

Fuel Comparisons and Operational Considerations

Low-sulfur diesel remains widely used, with renewable diesel and biodiesel providing a near-equivalent energy content and offering “plug-and-play” adoption despite storage and quality considerations.

Methanol presents additional constraints due to its lower energy density, which raises important considerations regarding fuel storage, travel distances, and required retrofits, such as hull expansions and dedicated tanks. LNG, on the other hand, benefits from a longer track record, making it more established within dual-fuel applications.

Growth of Methanol-Capable Ships

The global fleet of methanol-capable vessels has expanded rapidly. CMA tracks more than 100 operational methanol ships as well as over 350 vessels on order. Many of these investments are being made by large global shipping companies seeking pathways to reduce emissions and future-proof their fleets.

Route Patterns and Bunkering Access

Current dual-fuel methanol ships often operate on routes aligned with methanol supply centers, such as flows from Trinidad & Tobago to the ARA region. Other vessels maintain global operations thanks to their ability to use traditional fuels when needed, underscoring the value of dual-fuel flexibility.

Bunkering Infrastructure Expansion

Methanol bunkering hubs are emerging at major ports worldwide, with additional facilities under development. Green shipping corridors—including one planned from South Korea to the Seattle–Tacoma region by 2027—illustrate the growing alignment between fuel supply chains and future-fuel vessel deployments.

Regulatory Changes – The Way Forward

Regulation is playing an increasingly pivotal role in shaping fuel selection and investment across the maritime sector. To date, the market leader has been LNG as there is a more extensive distribution and regulatory framework in place, plus an established and transparent cost structure.

Over the last few years, ammonia and methanol have also gained traction, with several similarities noted, including the use of raw materials and production methods for both fuels.

However, what is clear is that no single fuel fits all, and each has its own relative merits and drawbacks.  In terms of regulations, the European Union and the IMO (International Maritime Organization) have both been fairly agnostic in their views on what the preferred fuel would be to comply. The EU’s approach to reducing emissions is structured around the Green Deal, aiming for the region to be climate-neutral by 2050. The IMO set out more ambitious targets to reach net zero emissions in shipping by 2050, which will require the adoption of low and zero-carbon fuels. These targets operate in parallel with one another, not in tandem.

In January 2025, the FuelEU came into force, establishing declining greenhouse gas intensity limits for ships operating within the EU and EEA, starting with a 2% reduction in 2025 and reaching 80% by 2050. 

IMO’s Draft Global Framework

At the international level, the IMO has proposed a global net-zero framework that includes:

• Mandatory fuel standards
• A global price mechanism for emissions centered on the greenhouse gas fuel intensity (GFI) metric
• GFI compliance tiers, as well as surplus and remedial units (RUs)
• RUs priced at $100/tCO₂ (Tier 1 RUs) and $380/tCO₂ (Tier 2 RUs) – proceeds from these sales would go into the IMO net zero fund. Parts of the revenue were intended to be circulated back to the industry and reward for using zero and net zero energy sources.
• A requirement for ships to develop or update their data collection and reporting plan, which must be verified and kept on board, along with a confirmation of compliance, prior to the start of the first reporting period, which is January 1, 2028.

Although the final vote was postponed for 12 months, existing 2030 targets have already been agreed, and the postponement is not considered a rejection. Investment trends suggest that shipowners anticipate further regulation—regional or global—and are already adjusting their vessel orders and retrofits accordingly.

Long-Term Implications

Even without immediate global alignment, pressure from financiers, charterers, and regional governments is accelerating the adoption of dual-fuel technology and alternative fuels. The regulatory environment is expected to continue guiding investment behavior for the foreseeable future.

Methanol’s Expanding Role as a Marine Fuel

The following section focuses on the fundamentals of the methanol market and its expected role in future fuel demand.

Global Demand Context and Forecasts

Current estimates for global methanol demand are approximately 95 million metric tons (2025), projected to exceed 110 million metric tons by 2030. Marine fuel currently represents a small portion of demand but is forecasted to grow rapidly, accounting for 3% of global methanol demand by 2030.

Announcements from many of the world’s largest shipping companies, such as COSCO, Maersk, CMA/CGM and others,  regarding new methanol-ready vessels have led to a significant increase in both newbuilds and retrofits. Currently, more than 120 vessels capable of operating on methanol are already in operation, with over 350 more on order.

The main advantage of methanol is that it is sulphur-free, so it can satisfy the strict International Maritime Organization IMO sulphur emissions legislation.

The disadvantage is that it has only around half the energy content of traditional bunker fuels; therefore, it requires significantly more space on the ship. For this reason, our original assumption was that apart from major methanol producers such as Methanex and Proman burning their own product as fuel, methanol only had a limited role to play in the shipping world: in short-haul and inland shipping; barges, ferries, pilot vessels etc. 

It now appears clear that methanol has a much more mainstream future in the shipping industry than was previously anticipated, especially given the increasingly stringent penalties for shipowners who do not comply with emissions legislation.

Low-Carbon Methanol Supply Outlook

We are currently tracking over 200 low-carbon methanol projects worldwide, encompassing both biomethanol and e-methanol. Costly and inefficient projects are being phased out, while more competitive projects—especially in mainland China—are advancing.

There are questions about whether low-carbon methanol can compete with grey methanol in terms of production cost, as well as whether there will be sufficient low-carbon methanol to satisfy demand. Under the assumption that the shipping industry is the most logical home for low-carbon methanol, much of the hypothetical new low-carbon methanol capacity is located near major bunkering hubs, such as Rotterdam and Singapore.

Shipping demand for methanol could reach almost 30 million metric tons by 2050 and nearly 40 million tons by 2060, placing substantial pressure on the low-carbon supply chain.

While in the short-term, demand for methanol is very modest, in the medium and long-term, demand is set to become material and above the level of GDP. However, there are challenges such as its low energy density, the recent IMO decision, cost and availability.

 

Ammonia as a Marine Fuel

The final section explored ammonia’s emerging role in the maritime transition.

Growing Vessel Orders and Infrastructure Investment

The order book for ammonia-ready and dual-fuel vessels is expanding rapidly, with large new build commitments scheduled for delivery between 2027 and 2029. Many of the larger orders range from 150,000 to 350,000 cubic meters. Given that larger vessels are inherently designed to consume greater volumes of marine fuel, a sustained trend of such high-capacity orders would strongly bolster the proposition that ammonia is poised for a substantial increase as a dominant marine fuel in the coming years.

Our forecast anticipates a substantial expansion phase for ammonia as a marine fuel between 2030 and 2035, followed by a gradual deceleration into 2040. From 2040 onwards, our projections are based on the assumption of sustained global GDP growth. Elements that may alter this forecast include a shortage of available shipyards to build the ships, vessels switching to different fuels, and the speed at which engine manufacturers address current issues.

Our projections extending to 2060 illuminate key strategic hubs poised to meet the burgeoning demand for this innovative fuel, highlighting a decisive pivot in the shipping industry. The Maritime and Port Authority of Singapore (MPA) stands at the vanguard of this transformation. The region’s ongoing Request for Proposal (RFP) process, inviting bids for the development of ammonia bunkering facilities, further cements its commitment and signals robust regional interest in ammonia’s profound potential as a marine fuel. Beyond Singapore, other critical regions are rapidly advancing their capabilities, such as South Korea, Canada, Australia’s Pilbara region, China, India, Egypt, and major European ports such as Rotterdam, Antwerp, and Brunsbüttel.

Advantages and Constraints

Ammonia is rapidly solidifying its position as a leading contender for decarbonizing the marine sector, leveraging several key advantages that make it highly attractive. Unlike hydrogen, ammonia benefits from a higher density and the existence of a global trade infrastructure that could be adapted for fuel supply. Furthermore, the commitment to its commercialization has been underscored by significant regulatory moves, such as the Singapore Port Authority approving a consortium to develop ammonia bunkering facilities in the world’s largest refuelling hub. These factors suggest that ammonia meets long-term emissions targets and has a clear path toward practical integration into the shipping industry.

However, the widespread adoption of ammonia is currently hindered by several critical safety, operational, and supply chain challenges. The primary obstacle is toxicity, which necessitates the implementation of strict new safety protocols. Operationally, emissions remain a concern, particularly ammonia slip and the release of highly potent nitrous oxide emissions. The biggest long-term risk relates to the sustainability and availability of clean fuel: the environmental benefit is lost unless Green or Blue ammonia is used, and there are current concerns over a low number of announced production projects reaching the final investment stage. Combined with the high cost and limited bunkering infrastructure, these challenges demand focused innovation to secure a safe, efficient, and clean supply chain. 

Long-Term Demand Outlook

Ammonia demand as a marine fuel is projected to reach 35.1 million metric tons by 2060, with the strongest uptake expected in high-traffic regions across Western Europe and Asia Pacific. Continued innovation in safety, emissions control, and production will be essential to unlocking its full potential.

Conclusion

The marine energy landscape is entering a decisive period of transition. Traditional fuels continue to dominate bunker markets, but tightening regulations, evolving fleet strategies, and growing investment in low-carbon alternatives are accelerating the shift toward cleaner solutions. Methanol and ammonia are emerging as the most significant contenders, supported by evolving vessel technology and expanding global infrastructure.

Although no single fuel has yet emerged as the definitive solution, the industry is clearly preparing for a diversified future—one shaped by policy, innovation, and the collective drive toward decarbonization.