While the global bunker fuel market continued to be shaped in 2025 by the war between Ukraine and Russia and risks to Red Sea shipping, those concerns paled in comparison to a delay in the push toward lower-carbon fuels.
The UN's International Maritime Organization, which had hoped in October to adopt its Net-Zero Framework that would have imposed a global tax on shipping emissions, opted instead to delay a decision for a year.
The plan was supported by the International Bunker Industry Association, a nongovernmental organization that represents the bunker and marine fuel industry, and the group said it was surprised by the delay.
IBIA said it had expected the proposal to sail through to a vote, adding that it, along with a "significant number of international associations...had expected a different outcome."
The organization said it was "already engaged in crucial work on the detailed guidelines. Meanwhile, a majority of IMO's member states weren't prepared to move ahead, making shipping the first sector with a global regulatory framework to decarbonize."
The Trump administration opposes the emissions tax, adding that it wouldn't comply with any tax and threatened to take measures against countries that support the measure.
This stance initially gained backing from a core group of countries that included Saudi Arabia and Greece, and picked up support from other countries that voted for the one-year delay.
Meanwhile, the shipping market will continue to be regulated by regional requirements, including taxation systems of the European Union Emissions Trading Systems, Fuel EU, U.K. ETS, which is set to take effect in June. The delayed vote, however, clears the way for continued use of traditional bunker fuels worldwide for at least another year.
Shipping companies have delayed investing in retrofitting existing ships or buying ships that can operate on low or zero-carbon fuels because of the regulatory uncertainty, industry sources said. And the marine biofuel market, which looked to be the early winner in emissions abatement, has seen investment slow.
The Bloom is Off the Scrubber Spread
While very-low-sulfur fuel oil will continue to be the dominant fuel in 2026, the Hi-5 spread, the difference between the price of 0.5% sulfur max VLSFO and 3.5%S max High Sulfur 380 CST narrowed sharply in 2025.
At the main bunker hub in Houston, for example, the price for VLSFO rose to a 2025 high in the first quarter, when it averaged $543.33/metric ton ex-wharf, according to OPIS data. HS 380 CST over the same period averaged $448.13/mt, putting the average Hi-5 spread at $95.20/mt. Over the same period, Brent crude prices averaged $74.98/bbl.
VLSFO values weakened to $467.65/mt in Q2 with Brent averaging $66.74/bbl, rose in Q3 to an average of $484.56/mt as Brent averaged $68.17 and fell to $441.61/mt over the first two months of Q4 with Brent averaging $63.82/bbl.
Over the same period, HS 380 CST was assessed $399.08/mt in Q2, $419.92/mt in Q3 and $400.71/mt in the first two months of Q4.
These price movements led to Hi-5 spreads of $68.56/mt in Q2, $64.64/mt in Q3 and $40.90/mt in the first two months of Q4. The yearly low for the spread was $18/mt on October 15, according to OPIS data.
Bunker market sources attributed the narrowing Hi-5 spread to several factors.
"Russia sanctions have removed from the market a large source of high-sulfur [fuel oil]," a trader said, adding that the product, which was "very good material...that had a good yield...is gone."
A bunker broker said a scrubber uptake has peaked, leading to steady demand for high sulfur fuel.
"If you wanted a scrubber, you have one," the source explained. What had been an 18-month wait for scrubber installation three to five years ago has ended.
HS 380 CST should retain a consistent share of the marine fuels market, though not as large as VLSFO, market sources said.
Sources said that while biofuels, LNG, methanol and ammonia will continue to be in demand in the new year, the IMO's delay decision has tempered expectations.
"As a buyer, you are making good financial decisions for your company. You weigh fuel costs...and now the cost of your carbon emissions, a former buyer for a shipping company said. "At the end of the day, you're going to make the decision that's best for the economics of your company."
Grey methanol, which reduces the tank-to-wake emissions to an acceptable industry level but doesn't meet the well-to-well reduction, was assessed in the second week of December at $675.56/mt delivered Houston per VLSFO energy equivalent. At the same time VLSFO was assessed at $438/mt delivered.
The former buyer said that while the future is alternative fuels, the transition has turned into a "slow roll" because of costs. Until the industry reaches "a scale of economy through availability, the current fossil fuels will dominate the market," he added.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
Reporting by Tom Sosnowski, tsosnowski@opisnet.com ; Editing by Jeffrey Barber, jbarber@opisnet.com
(END) Dow Jones Newswires
December 30, 2025 14:32 ET (19:32 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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