Bunker oil, better known as “heavy oil”, “furnace oil”, or “marine fuel”, comes from distillation of mineral oil; in the form of a residue or distillate. Naphtha, propane, gasoline (for cars), and jet fuel do have relatively lower boiling points. As such, they get extracted at the very start of fractional distillation. Lubricating oil and diesel do get distilled out slowly; whereas bunker oil; being at the rock bottom; takes time. MEA has been at the forefront with regards to bunker oil market since ages. Though it still continues to rule; Latin America is catching up. LATAM is expected to grow at the highest CAGR in the years to come.
The term “bunkering” refers to storing petroleum products in the tanks. The current scenario is such that around 300 million metric tons of the fuel oil is used to ship bunkering. However, stringent regulations in developed economies needs usage of fuels containing minimal Sulphur for combating pollution. This goes to prove that excess quantity of cheap, unkempt fuel would make a beeline to the developing economies; which would include disruption of onshore production therein.
The shipping industry worldwide is driven by the bunker oil market. Oil tankers get transported to the strategic ports like Cristobal, Rotterdam, Algeciras, Sokhna (Egypt), Balboa, Fujairah, Singapore, and Houston. Rhine river facilitates physical supply of lighter oils all over Europe through supply chains. Pipelines also serve the purpose. However, there are factors likely to hamper the bunker oil market. Bunker fuel emissions in the ships do cause air pollution in corresponding port cities. Emissions of carbon dioxide from bunker oil sold don’t get added to GHG emissions. For the countries that have huge international ports, there lies a difference between emissions of fuel sold and the emissions in territorial watery surfaces.