Marine Fuel 0.5%

Very low sulphur fuel oil is the youngest major oil benchmark, brought into existence by the International Maritime Organization's global sulphur cap, which dropped the limit on marine fuel from 3.5% to 0.5% on January 1, 2020. Overnight, the world's ships stopped burning high-sulphur fuel oil unless fitted with exhaust scrubbers, and a new product had to be blended at scale from low-sulphur residues and distillate-range components. Platts Marine Fuel 0.5% assessments in Singapore, Fujairah, and Rotterdam became the pricing references, with Singapore, the world's largest bunkering port at a record 54.9 million tonnes of sales in 2024, as the global anchor.

The market now runs on a three-fuel structure. VLSFO 0.5% is the default for the unscrubbed majority of the fleet; HSFO 380 cst survives as a discounted niche for the roughly 30% of large-ship tonnage fitted with scrubbers; and marine gasoil serves the strictest emission control areas. The Hi-5 spread, VLSFO minus HSFO, is the market's key internal signal: it sets the payback period on a scrubber installation and swings with the supply of sweet residue. Swaps on all three legs clear on CME and ICE against the Platts assessments.

Bunker demand, roughly 5 million barrels per day of oil equivalent, moves with trade volumes and routing. The Red Sea diversions that began in December 2023 forced ships around the Cape of Good Hope, adding tonne-miles and bunker demand in a way no demand model had forecast. The next decade's question is fleet decarbonization: LNG, methanol, and ammonia dual-fuel newbuilds are growing from a small base, but conventional fuel oil remains dominant through the 2020s.