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Five years after IMO 2020, the scrubber decision is no longer about whether the technology works. It is about whether the HSFO-to-VLSFO price spread is wide enough to amortise the capital cost before the next regulatory step changes the maths again. With MEPC 83 approving a carbon-pricing framework that takes effect on 1 March 2027, the answer for a vessel built around 2020-2021 has shifted from “obvious yes” to “depends on age, trade lane, and how aggressively you discount future carbon costs.” Here is the framework Au Club’s customers are using to make the 2026 decision.

What changed since IMO 2020 took effect

On 1 January 2020 the IMO’s 0.50% global sulphur cap entered force. Operators had three compliance options:

1. Burn VLSFO (very low sulphur fuel oil) at 0.50% sulphur, or MGO/MDO
2. Install a scrubber (Exhaust Gas Cleaning System, EGCS) and continue burning HSFO at 3.5% sulphur
3. Switch to LNG, methanol, or another alternative fuel

Roughly 25% of the world fleet by tonnage installed scrubbers — disproportionately concentrated in container, tanker, and bulker segments where bunker is a high share of operating cost. Most of the remainder run on VLSFO.

The scrubber spread (the HSFO-to-VLSFO price differential) drove the economics. In early 2020 the spread averaged $250-300 per MT. With a typical scrubber capital cost of $4-8 million depending on vessel size, payback periods were one-to-three years for a modern Suezmax or VLCC.

Then the spread compressed.

The scrubber spread in 2020-2025

HSFO–VLSFO spread at Fujairah and Singapore, monthly averages

The compression was driven by two structural forces. Refineries adjusted their crude slate and product mix to produce more VLSFO. HSFO demand fell as part of the fleet converted permanently to VLSFO. The spread settled into a $80-130/MT range that has held for about three years.

At a $100/MT spread, a 200,000-MT-per-year bunker consumer saves $20 million per year by running HSFO + scrubber. That is still a meaningful number for a fleet operator. But at a $250/MT spread, the same operator was saving $50 million. The economics moved from “compelling” to “good.”

What the TCO model actually compares

A five-year total-cost-of-ownership comparison for a Suezmax tanker (modeled here as an illustrative working example, not specific operator economics):

Assumptions: – Vessel: Suezmax, 158,000 DWT – Annual bunker consumption: 14,000 MT – VLSFO price assumption: $580/MT – HSFO price assumption: $480/MT (spread $100/MT) – Scrubber capex (open-loop): $4 million, fully amortised over 5 years – Scrubber sludge disposal, NaOH (closed-loop only), and maintenance: $80,000/year per scrubber – MEPC 83 carbon-pricing impact phased in from March 2027 (so 2 years out of 5)

Five-year cumulative cost (USD millions)

At a $100/MT spread, an open-loop scrubber breaks even or modestly outperforms VLSFO over five years on this profile. A closed-loop scrubber does not — the additional opex (sodium hydroxide for neutralisation, sludge disposal) offsets the bunker saving.

The number that matters is the spread. At $130/MT, open-loop wins comfortably. At $80/MT, it loses. Lock yourself into a regulatory environment that further raises HSFO’s emission cost (the MEPC 83 carbon factor) and the model tightens against scrubbers.

Operational realities the TCO model doesn’t capture

Three considerations that matter and are hard to quantify:

Open-loop discharge restrictions. Singapore prohibits open-loop scrubber discharge inside port limits. China’s coastal Emission Control Areas (Bohai, Yangtze River Delta, Pearl River Delta) restrict open-loop operation. The EU is debating tighter rules under FuelEU Maritime and revised port-state controls. Open-loop scrubbers are progressively losing operational windows. A vessel that spends 30% of its time in restricted waters loses 30% of the scrubber benefit on those legs.

Closed-loop opex. Closed-loop scrubbers do not discharge to sea, but they consume sodium hydroxide (caustic soda) and generate sludge that must be disposed of. NaOH consumption runs $50-150,000/year per vessel depending on operating profile. Sludge disposal at major ports varies; some ports charge $200-500/m³.

Resale value. A scrubber-fitted vessel commands a premium in the second-hand market when the spread is wide and a penalty when the spread is narrow. Predicting this five years out is genuinely difficult.

Carbon-pricing exposure. MEPC 83 prices Remedial Units at up to $380 per ton CO₂e above the base target by 2035. HSFO has a higher carbon factor than VLSFO (3.114 vs 3.151 — actually marginally lower per MT of fuel, because VLSFO has more carbon per MT). The well-to-wake intensity matters more than tank-to-wake under the IMO framework. Run the calculations with your bunker consumption and the framework’s intensity tables.

Decision tree for an owner or operator

Practical questions Au Club’s customers run through:

1. Vessel age. If your vessel is under five years old and has fifteen years of trading life ahead, the capex amortisation works. If she has ten or fewer years left, payback windows are tight.
2. Trade lane scrubber-friendliness. What share of your trading time is in open ocean vs in scrubber-restricted ports / ECAs? Open ocean tramping favours scrubbers. Asian intra-region container service does not.
3. Charter market exposure. Are you trading on time charter (where the charterer pays bunkers) or on the spot market (where bunker cost is yours)? Spot market exposure makes the scrubber argument harder because spreads are unpredictable.
4. Capital cost of capital. A high WACC penalises capex-heavy options. An owner with cheap debt sees scrubbers more favorably than one without.
5. Future regulatory exposure. Lower-carbon fuels (LNG, methanol, biofuel) will further compress the scrubber economics over time. If you expect to convert to LNG within 7-10 years, do not install a scrubber now.

What we are telling fleet owners

Three working assumptions Au Club uses with customers in early 2025:

1. Do not retrofit a scrubber to an existing VLSFO-burning vessel under 15 years old unless you have very specific circumstances. The capex payback period at current spreads is tight against further regulatory cost on HSFO.
2. If you already have a scrubber, keep running it. Operating cost is meaningful but the capex is sunk. The five-year economics still work at $100/MT spread for most asset classes.
3. For new-builds, evaluate LNG, methanol, and dual-fuel capability seriously. The 2027-2030 regulatory environment favours alternative fuels.

For mid-sized operators without inside views on refinery margins, the simplest rule is: lock VLSFO supply with a multi-year contract, monitor the scrubber spread monthly, and re-run the TCO model annually.

FAQs

About Au Club

Au Club supplies VLSFO (0.5% S) and HSFO (3.5% S) marine fuels at Jebel Ali, Port Khalifa, Fujairah, and Khor Fakkan. Multi-year supply contracts available. ISO 8217:2024 compliant. Contact our bunker desk to discuss your 2025-2026 bunker strategy.

Sources & further reading

• IMO MARPOL Annex VI — 2020 sulphur cap
• IMO MEPC 83 — Net-Zero Framework
• EGCSA — Exhaust Gas Cleaning Systems Association
• S&P Global Platts — Bunker spreads

The Cape of Good Hope diversion costs roughly $1 million in extra bunker per Asia-Europe round-trip and adds about ten days at sea. If your fleet was built around a Suez-Bab-el-Mandeb routing — and most container, tanker, and Capesize operators planned that way for thirty years — your 2025 fuel budget is structurally different from your 2022 budget. This article walks through the cost, the new map of bunker demand, and what we are telling charterers about where the demand picture goes from here.

The disruption in numbers

Houthi attacks on commercial shipping in and around Bab-el-Mandeb began in November 2023. By October 2024 the US Defense Intelligence Agency had counted over 190 attacks. Container shipping through the Red Sea dropped by approximately 90% between December 2023 and February 2024.

The major carriers responded by rerouting. Maersk, MSC, CMA CGM, Hapag-Lloyd, Evergreen and ONE moved the bulk of their Asia-Europe and Asia-US East Coast services around the Cape of Good Hope. Tanker operators and dry bulk owners followed for vessel classes where the war-risk premium outweighed the routing cost.

By late 2024 the Houthis signalled willingness to halt attacks. Marine underwriters did not return to pre-2023 risk pricing. Most major operators kept the Cape routing through January 2025.

What the diversion costs per voyage

The Cape of Good Hope routing adds roughly 3,500 nautical miles each way on a Singapore–Rotterdam round-trip. At commercial steaming speeds, that is about ten extra days. The bunker cost depends on vessel class and consumption.

Worked example: 14,000-TEU container vessel, 220 MT/day VLSFO consumption at sea speed, $580/MT average bunker price.

A Suezmax tanker on the same Asia-Europe lane sees a similar order-of-magnitude increase in absolute terms, less in percentage terms. A Capesize bulk carrier on Iron Ore Australia–Europe routes via Cape was already the standard, so for that vessel class the change is smaller.

For a container line running fifteen weekly strings on Asia-Europe, the cumulative bunker shift is significant — multiple billions of dollars per year of incremental fuel demand globally.

How global bunker demand has redistributed

The geographic redistribution is what matters for trading desks. The traditional bunker hubs — Singapore, Fujairah, Rotterdam, Algeciras, Las Palmas — have all moved, but in different directions.

The South African and Indian Ocean island ports are the standout movers. Vessels rerouting around the Cape need to refuel somewhere on the southern leg. Port Louis in Mauritius has become a meaningful staging port; Algoa Bay anchorage off Port Elizabeth has tripled from a small base.

For Fujairah, the impact is more subtle. The port did not lose Asia-Europe transit volume — that traffic was always east of the Strait of Hormuz. What it gained was firmer demand from Indian Ocean voyages that previously chose to bunker at Salalah (Oman) or at Aden (no longer viable). Fujairah’s anchorage congestion has increased; barge waits have lengthened in peak weeks.

What changed between the late 2024 Houthi ceasefire and early 2025

The Houthi political wing made statements in late 2024 indicating willingness to halt attacks on commercial shipping. The maritime market did not snap back. Three reasons:

Insurance. War-risk premiums for Bab-el-Mandeb transit climbed through 2024 to multiple percent of hull value for some vessel classes. Underwriters require sustained risk-free passage before re-pricing.

Schedule reliability. Carriers built their 2025 sailing schedules around Cape routing in mid-2024. Re-routing back to Suez mid-schedule introduces port-omission risk, charter-party conflicts, and customer-service problems. Most carriers committed to the Cape route at least through Q2 2025.

Underwriter caution. Even if the route reopens, a single attack will close it again. Several major underwriters indicated they wanted six months of unbroken safe passage before reducing war-risk premiums to pre-2023 levels.

The result is a slow, conditional return — not a switch back.

How charter parties are repricing risk

In 2024 charter party clauses had to be rewritten to accommodate the new routing. The most-used updates:

• BIMCO War Risks Clause for Time Chartering 2013 activated to allow re-routing without breaching the charter
• Conwartime 2013 for voyage charters, with the Cape route as an explicit alternative
• Bunker Adjustment Factor (BAF) for liner shipping, repriced to reflect actual Cape-route consumption
• CII assistance clauses to accept that the longer route worsens the vessel’s Carbon Intensity Indicator rating — and to allocate the cost between owner and charterer

The CII issue is awkward. The IMO’s Carbon Intensity Indicator measures grams of CO₂ per deadweight-ton-mile. A longer routing means more emissions, but also more distance, so the per-distance metric does not necessarily worsen as much as raw fuel consumption suggests. Different charter forms allocate the rating penalty differently. Pre-2024 CP language does not handle this cleanly; expect to see CII-specific addenda in 2025 fixtures.

What we are telling charterers

Three working assumptions Au Club’s desk uses with charterer customers through 2025:

1. The Cape routing continues for most carriers through Q2 2025 at minimum. Insurance and schedule inertia will outlast the operational risk reduction.
2. Fujairah bunker premia to Singapore will hold or widen modestly. Indian Ocean rerouting and the Gulf’s stable supply give Fujairah a strategic role in 2025 that 2022 routing planning did not anticipate.
3. Plan bunker stems with longer lay-cans. Anchorage congestion at Cape Town and Fujairah peaks unpredictably. Build flexibility into the charter party.

For voyage owners contracted on liner-fed routes, the bunker arithmetic has changed enough that 2022’s optimised stemming plans no longer apply. Re-modelling annual bunker cost with Cape-route assumptions is now a quarterly exercise, not an annual one.

FAQs

About Au Club

Au Club supplies VLSFO and HSFO marine fuels at Fujairah, Jebel Ali, Port Khalifa, and Khor Fakkan. ISO 8217:2024 compliant. Multiple physical suppliers per port for competitive price discovery. ISO 14001-aligned procedures. Contact our bunker desk for stem enquiries.

Sources & further reading

• US Defense Intelligence Agency — Red Sea threat assessment
• Clarksons Research — Cape of Good Hope re-routing impact
• Suez Canal Authority traffic statistics
• IMF PortWatch — Bab-el-Mandeb transit data

The three UAE bunkering options are not interchangeable. Fujairah is the global benchmark, the third-largest bunker hub in the world, and the default for transit voyages. Jebel Ali is the port-of-call advantage when your vessel is loading or discharging cargo in Dubai. Khor Fakkan has anchorage capacity that has become significant since Red Sea diversions began. Which one to use depends on voyage economics, lay-can flexibility, and what you are paying for in the BDN. This is the working comparison Au Club’s bunker desk uses with charterers.

The three-port picture

Three Emirates serve the UAE bunker market. Each has its own physical infrastructure, supplier mix, and trading reputation.

The headline difference is volume. Fujairah moves around ten times the bunker tonnage of Jebel Ali. Its storage capacity, supplier count, and supplier competition make it the price-setter for the region. The Platts FOB UAE / Fujairah marker is what nearly every bunker invoice in the Middle East references, directly or indirectly.

Why Fujairah is the regional benchmark

Three structural reasons:

Geography. Fujairah sits on the Gulf of Oman, outside the Strait of Hormuz. A vessel transiting between Asia and Europe via Suez does not need to enter the Persian Gulf to bunker at Fujairah. That saves up to 36 hours of steaming versus Jebel Ali for a vessel that is otherwise transiting.

Storage depth. Vopak Horizon Fujairah alone holds approximately 3.5 million m³ of liquid storage. Concord, ENOC, and several other operators bring the total well above 10 million m³. This is what lets the port absorb supply-chain shocks that would dry out a smaller hub.

Supplier competition. With 35+ physical bunker suppliers, the spread between the highest and lowest offer on any given day is typically $5-15 per MT for VLSFO. That is the cheapest discovery process in the region.

The Platts FOB UAE VLSFO marker, the Fastmarkets Fujairah VLSFO assessment, and the Ship & Bunker Fujairah index all reference physical deals concluded into the port’s anchorage.

When Jebel Ali makes sense

Jebel Ali is the right answer when:

• Your vessel is loading or discharging cargo at Jebel Ali Port or DP World terminals on the same call. The bunker stop is incremental, not a detour.
• You need ultra-low sulphur fuels or specific grades that Fujairah’s bid-stack does not show that day.
• Your charter party requires a UAE west-coast bunker for cargo-specific reasons (some FOB sale contracts specify Jebel Ali load).
• You want simpler port formalities — DP World’s integrated agency handles the bunker stem alongside cargo operations.

Pricing at Jebel Ali typically runs $2-8 per MT above Fujairah VLSFO. The premium reflects supplier concentration (fewer competing barges) and tighter storage. For a ship already inside the Gulf, that premium is more than offset by the avoided detour fuel and time.

Khor Fakkan after the Red Sea diversion

Khor Fakkan’s role changed in 2024. As Cape of Good Hope diversions pulled Asia-Europe vessels off the Bab-el-Mandeb route, the port’s anchorage became attractive for vessels staging eastbound or westbound voyages without entering Fujairah’s congested approaches.

Khor Fakkan does not have Fujairah’s storage depth. Bunker barges shuttle product from Fujairah and from ENOC storage. The premium over Fujairah VLSFO runs $3-10 per MT, and the supplier count is small. The advantage is anchorage availability and reduced barge wait when Fujairah is congested.

For a transit vessel that values certainty of slot over price, Khor Fakkan in 2024-2025 has been the contingency option.

Price spreads — what the 12-month rolling shows

Twelve-month rolling pattern for the three ports against Fujairah VLSFO as the reference:

The Fujairah / Singapore spread is the most-watched. When it is negative (Fujairah more expensive), Gulf bunker demand is pulling barrels east. When it is positive by more than $15/MT, traders are arbing product west into the Middle East. The Au Club desk monitors this spread daily for our voyage chartering customers.

What to insist on in the BDN

The Bunker Delivery Note is the document that matters when there is a dispute. Five lines to check on every UAE bunker stem:

1. ISO 8217:2024 specification compliance — confirms the fuel meets sulphur, viscosity, density, sediment, and stability parameters. Insist on the 2024 revision.
2. Sulphur content — for VLSFO, ≤0.50% m/m. Sample sealing and chain of custody documented.
3. Density at 15°C — affects mass-to-volume conversion. Confirm the meter reading and the lab figure.
4. Sample sealing in the presence of Chief Engineer and supplier representative — four samples (ship retain, supplier, MARPOL, independent). Without this you have no dispute path.
5. Quantity verification by tank gauging plus volumetric meter — both methods, signed by both parties. The most expensive bunker disputes are quantity disputes.

The MARPOL sample is the legally significant one. It is the sample tested if the port-state control inspector challenges your sulphur compliance. Keep it sealed for at least twelve months.

Buyer’s checklist before you stem

Before you send the bunker requirement to a supplier or to Au Club:

• Vessel name, IMO, flag, last port, next port
• Grade required (VLSFO 0.5% S, HSFO 3.5% S, MGO DMA)
• Quantity (with min/max tolerance, usually ±5%)
• Lay-can (earliest/latest delivery dates)
• Payment terms (typical UAE bunker terms: 30 days net from BDN)
• Discharge port if relevant (affects route economics)
• Charter party clauses you need the bunker stem to honour (Cl.1 specifications, MARPOL Annex VI compliance)

The faster the requirement reaches the desk in standard format, the better the price discovery. A nine-line requirement that includes all the above will close in under two hours. An incomplete enquiry will take a day and end with a worse price.

Au Club’s role

Au Club supplies VLSFO (0.5% S) and HSFO (3.5% S) at Jebel Ali, Port Khalifa, Fujairah, and Khor Fakkan. We work with multiple physical suppliers at each port, which gives our charterer clients price discovery across the available bid-stack rather than a single supplier’s pricing. ISO 8217:2024 compliant. Full BDN documentation. Sample sealing and laboratory testing through SGS or Intertek where requested.

To request a quote, send the nine-line requirement to our bunker desk. Response time within two business hours.

FAQs

About Au Club

Au Club is a Dubai-based commodity trader supplying marine fuel at Jebel Ali, Port Khalifa, Fujairah, and Khor Fakkan. VLSFO 0.5%, HSFO 3.5%, MGO DMA. ISO 8217:2024 compliant. Request a bunker quote at our website.

Sources & further reading

• S&P Global Platts Bunkerwire — Fujairah assessment
• Port of Fujairah official statistics
• DP World — Jebel Ali
• IMO MARPOL Annex VI — Bunker Delivery Note