Supplies of a vital ship fuel are running low in northwest Europe as the fallout from Russia’s war in Ukraine continues to upend oil markets.
There is a shortage of marine gasoil, known in the industry as MGO, in the oil trading hub of Amsterdam-Rotterdam-Antwerp, according to Svend Molholt, chief operating officer at fuel supplier Monjasa Group.
“We’ve seen unavailability of cargoes in the region,” Molholt said. Vessels that used to refuel with low-sulfur MGO in the Baltic region before Russia invaded its neighbor are now increasingly going to the Dutch-Belgian hub instead for more supplies, he added. That’s tightening the market and has a knock-on effect for the rest of northwest Europe.
The war’s effects have rippled through energy markets, with many companies shunning Russian oil and ships as international sanctions on Moscow continue to evolve. At the same time, many European refiners have carried out seasonal maintenance, curbing fuel supplies further and supporting prices.
The cost of low-sulfur marine gasoil—commonly used by shippers in northwest Europe to comply with an important environmental rule—has surged in Antwerp in recent weeks. The price has risen even more quickly than Brent crude futures, indicating increased competition for the ship fuel. MGO is similar to diesel, the price of which has also soared since the war began.
There is a general shortage of MGO and other diesel-type fuels “reaching from north France and ARA to the Baltics,” said Soren Holl, chief executive officer of KPI OceanConnect, a marine fuel trader and broker. Planned refinery maintenance is a contributing factor, he added.
“At this stage we do not foresee a market where shippers cannot get their gasoil,” Holl said. But those who purchase last minute “will struggle” and may need to pay a fee, known as demurrage, in order to wait for in-port supply.
Oil product tanker owner Torm A/S recently bought 0.1% sulfur MGO at very short notice without any problems. The market has gradually been tightening over the past month, the firm said, though not to a degree that is a concern.
“What we can see is the inflow of Russian oil and products have been reduced, creating a shortage in northwest Europe, and prices have gone up,” the company said in a statement.
Follow us on social media: