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Bunkering operations in Fujairah have slowed significantly following a fire caused by drone debris, prompting key oil storage terminals to suspend vessel loadings and driving marine fuel premiums sharply higher. The incident, attributed to debris from an intercepted drone amid regional tensions, has disrupted supply chains at the critical United Arab Emirates port and raised concerns over global fuel availability.
Vopak confirmed on Wednesday that it temporarily suspended vessel loading operations at its Fujairah terminal following the fire, though the facility remains partially operational. Separately, VTTI stated on Tuesday that it had suspended operations at its terminal in the area. The disruptions come as transit through the nearby Strait of Hormuz has ground to a near halt after vessels in the area were hit, further complicating trade flows for one-fifth of the oil consumed globally.
Operational Disruptions and Price Spikes
The fire and subsequent operational pauses have created immediate bottlenecks for shipowners and traders. While bunkering continues at the port, sales have largely stalled as market participants await clarity on the extent of the damage and the duration of the disruptions. The uncertainty has fueled a rapid jump in prices, with low sulphur marine fuel offers at the port rising to premiums of more than $30 per metric ton over Singapore fuel oil quotes, up significantly from $10 to $15 last week. High sulphur fuel prices have also shifted to premiums from previous discounts.
The Fujairah media office stated that the fire was caused by debris resulting from the interception of a drone by air defenses, linking the incident directly to the ongoing conflict involving the United States, Israel, and Iran. This geopolitical friction has already disrupted fuel shipments in the region. Market sources in Dubai noted that the conflict has spurred caution among shippers, leading to a gridlock in volumes typically transited through the Strait of Hormuz.
Demand Shifts to Alternative Hubs
With operations constrained in the Middle East, market participants anticipate a structural shift in bunker demand to other key logistical hubs. Traders expect volumes to move to Singapore, Rotterdam, the Mediterranean, Colombo, and India if tankers continue to avoid the region or remain stranded inside the Gulf. Spot demand in Singapore, the world’s largest bunkering port, was already brisk late on Monday as shipowners moved to secure fuel ahead of potential price increases.
Industry analysts warn that prolonged disruptions could tighten global supply further. Royston Huan, a senior oil products analyst at consultancy Energy Aspects, highlighted the risk of supply curtailment in Singapore if the gridlock at the strait persists. Market sources indicated that premiums are expected to follow the surge in demand if the conflict continues, forcing ship operators to absorb higher costs or seek longer routes to secure fuel. Brent crude futures have already jumped in response to the heightened risk, pushing prices and margins for high sulphur fuel oil higher across Asia.
