The Hi5 spread in Fujairah, representing the price differential between Very Low Sulphur Fuel Oil (VLSFO) and High Sulphur Fuel Oil (HSFO), has seen a substantial increase throughout the current month. This widening gap is primarily a result of limited VLSFO supplies arriving at the UAE port, with the majority of recent fuel oil deliveries consisting of HSFO. Data indicates that the spread grew from $201/metric ton at the beginning of September to $285/metric ton by Thursday, according to daily average prices. This trend has caused Fujairah's Hi5 spread to become notably wider compared to those observed in key bunkering hubs like Singapore and Zhoushan.
For freight forwarders and operations managers, this development signals potential increases in bunkering costs for vessels refueling in Fujairah, particularly those requiring VLSFO to comply with IMO 2020 regulations. The scarcity of VLSFO could lead to higher premiums or necessitate longer lead times for sourcing this fuel type. Shippers might experience slight upward pressure on freight rates as carriers factor in these elevated fuel expenses. Forwarders should advise clients on potential cost implications and consider alternative bunkering locations if Fujairah's VLSFO prices remain significantly higher.