Andre Klynsmith

Ports and Terminals

The Distillate Premium: Why the Cape Route's Bunker Bill Has Become a Grade Problem

Marine gasoil across EMEA ports is trading at roughly double the price of very low sulphur fuel oil, an unusually wide split that changes the arithmetic of bunkering a Cape-route vessel. For Southern African ports competing for that business, grade availability now matters as much as location.

Ports and Terminals

11 September 2026 • 4 min read

The EMEA average marine gasoil indication stands at US$1,647.50 a tonne against US$826.00 for very low sulphur fuel oil. A vessel that needs distillate on a long Cape passage is buying into a market priced very differently from the one that sets headline bunker comparisons.

Two Fuels, Two Markets

Current indications put the EMEA regional average for very low sulphur fuel oil at US$826.00 a tonne and marine gasoil at US$1,647.50 a tonne. Globally the gap is narrower but still pronounced: the Global 20 Ports average sits at US$842.50 for VLSFO against US$1,467.00 for MGO, and the global average bunker price at US$880.50 against US$1,529.00.

A residual-versus-distillate premium is normal. A premium approaching double is not, and it reflects a distillate market that has been tight since Middle East refining and export flows were disrupted. Vessels burning MGO in emission control areas, on auxiliary engines, or because their bunker plan calls for distillate, are exposed to that tightness in a way that headline VLSFO comparisons do not capture.

Fujairah Is No Longer the Cheap Stem

The second signal in the same price set is geographic. Fujairah, historically a competitively priced Gulf bunkering hub, now shows the highest VLSFO indication of the four benchmark ports at US$887.00 a tonne. Rotterdam is the cheapest at US$701.00, with Singapore at US$856.00 and Houston at US$737.50. That is a US$186 a tonne spread between Fujairah and Rotterdam on the same grade.

When a Gulf hub becomes the expensive option, the commercial logic of stemming inside a high-risk area weakens further. Operators already paying elevated war-risk premiums for those waters have little reason to buy fuel there as well. That pushes bunker demand outward — toward Singapore in one direction and, for anything routing around southern Africa, toward the Cape.

What Southern African Ports Have to Get Right

A vessel choosing a Cape-route bunker stem is making a narrow commercial decision: can it get the grade it needs, in the quantity it needs, without losing time. Walvis Bay, Cape Town, Algoa Bay and Durban each sit on the right geography for that decision. Where the region has historically struggled is on the second half — grade availability, duty and customs treatment of imported bonded fuel, and in-port cost for larger vessels.

The distillate premium sharpens that problem. A port that can supply VLSFO but not reliable volumes of compliant MGO is competing for only part of the passing demand, and the part it cannot serve is the higher-value part. Equally, a port where the tax treatment of imported bonded fuel remains unsettled struggles to attract the floating storage that makes consistent supply possible in the first place.

About the Author
	Andre Klynsmith Entrepreneur & Technology Enthusiast Andre's expertise spans technology, blockchain, transport, and logistics — with a passion for innovation and driving positive change across industries. info@laaimylorrie.com | laaimylorrie.com