Singapore's Bunker Market Shows Resilience Amidst 2026 Supply Disruptions

Singapore's marine fuel sector, a global leader, faced considerable challenges in 2026, including a severe supply disruption following a crisis in the Middle East. Despite these pressures and growing competition from Chinese ports, the port's bunker volumes maintained single-digit percentage variations compared to the previous year, according to a market intelligence report by Alkagesta.

Mithat Çiftçioğlu, Marine Fuels Distribution Director at Alkagesta Singapore, highlighted a shift in market focus. He noted that discussions have moved beyond just fuel prices to the fundamental issue of accessibility. This perspective underscores the impact of the Hormuz crisis on the global marine fuels supply chain.

Market Dynamics and Supply Challenges

Singapore entered 2026 on a strong note, with total bunker sales reaching a record 56.2 million metric tonnes (mt) in 2025, a 3.2% increase. High-sulphur fuel oil (HSFO) sales saw a 7.8% rise, driven by an expanding scrubber-equipped fleet. This momentum continued into February 2026, with sales up 12% year-on-year to 4.61 million mt, featuring increased bio-blended and LNG bunker sales.

The market faced a significant downturn after hostilities escalated in the Middle East on February 28, effectively removing a fifth of global crude oil supply. This sent Very Low Sulphur Fuel Oil (VLSFO) prices above $1,000 per tonne, roughly double pre-war levels. Çiftçioğlu explained that while strategic petroleum reserves could stabilise crude prices, they could not quickly resolve the bunker market's access issues due to the time required for refining and logistics.

By April, Singapore's bunker sales declined by 8.7% month-on-month to 4.4 million mt, affected by a sharp drop in oil tanker arrivals. May saw a second consecutive year-on-year decline, with sales easing to 4.5 million mt, as shipowners delayed bunkering decisions due to steep backwardation. Despite these dips, the port's ability to keep volumes within single-digit percentage points of the prior year indicates a deep-seated resilience.

Competition and Strategic Advantages

The disruption intensified competitive pressures from Chinese ports, notably Zhoushan. In April, the Singapore-Zhoushan VLSFO price spread widened to approximately USD 56/t, attracting vessels to Zhoushan, before narrowing to around USD 15/t by June as Singapore's prices adjusted. Chinese refiners benefited from competitively priced feedstocks and government support, helping to sustain refinery output. Ningbo-Zhoushan even surpassed Singapore as the world's second-busiest container port in Q1 2026.

For operators in Singapore, the response involves leveraging infrastructure depth and supply chain control. Çiftçioğlu emphasised the importance of "physical control" in Singapore. Alkagesta Asia, established in late 2024, secured storage capacity at Horizon Terminal by mid-2025, providing direct control over fuel quality, inventory, and delivery. This infrastructure supports a monthly trading volume of around 200,000 mt, primarily VLSFO and LSMGO, introduced in late 2025.

Alkagesta's broader group leverages commodity trade finance facilities exceeding USD 1.2 billion and relationships with 28 international banks, ensuring liquidity and supply continuity during price surges and tightened credit conditions. Singapore's enduring competitive edge over Chinese ports also lies in its regulatory depth, transparency, and long-term infrastructure investment. The Maritime and Port Authority of Singapore (MPA) issued its first methanol bunkering licences in November 2025, valid from January 2026 to 2030, positioning the port as a multi-fuel hub for future decarbonisation demands.

Building Resilience Through Preparation

The March 2026 disruption tested Alkagesta's Singapore supply chain, but it held firm. Çiftçioğlu stated, "During periods of market stress, resilience is built well before the crisis begins." This resilience stemmed from long-term sourcing relationships, diversified supply routes, and a robust compliance framework that exceeded minimum market requirements. As a European company, Alkagesta applied rigorous Know Your Customer (KYC) and sanctions screening standards ahead of regulatory changes, which Çiftçioğlu noted is crucial for building long-term relationships with customers, banks, and partners.

This preparation allowed banking partners to increase credit support, shipping partners to maintain logistics, and trading counterparties to collaborate closely, ensuring uninterrupted supply to customers when many others declared force majeure.

While geopolitical uncertainty and the unresolved Hormuz situation continue to influence near-term demand and push some volumes towards Chinese ports, Singapore's long-term position as the leading bunkering hub remains strong. Environmental regulations, FuelEU Maritime requirements, and the shipping industry's decarbonisation trajectory are expected to drive demand for compliant and lower-carbon fuels, a transition Singapore is well-positioned to lead. Alkagesta's objective in Singapore remains consistent: to build long-term partnerships through consistent and reliable deliveries.

Source: Alkagesta