Increased bunker costs are showing no signs of falling and the conflict in the Strait of Hormuz is expected to continue to drive elevated fuels costs into the foreseeable future, however, an unintended consequence of high bunker prices is that alternative fuels become financially viable.

Moreover, the drive to find efficiency gains will be crucial to vessel operators and charters alike as the drive to achieve major cost savings, in direct fuel costs and carbon penalties, could become a driver for decarbonisation.

Brent crude prices fell to US$90.38/barrel in April, after US President Donald Trump announced a ceasefire and pledge to never close the Strait of Hormuz again.

Two days later, it was back at US$118, after Iranian government officials suggested no such negotiations had taken place.

Ever since then oil prices have been somewhere between US$90 and US$120 – as continuing uncertainty and political instability create a volatile trading environment for vessel operators.

These crude prices translate to very high bunker costs, ranging from US$1,120/tonne for VLSFO in Singapore during March, before dropping to a still pricey US$608/tonne in April. In early May, it rose sharply once again, reaching US$862/tonne. By mid-May Singapore bunker prices remained over US$880/tonne.

On the other hand, for Permian basin shale producers, more is better: in March, even with oil at US$112/barrel, Chevron CEO Mike Wirth remarked that supply and transport costs were “not fully priced in”. With production costs of US$30-40/barrel over the last decade, US shale soared at the present prices.

Mærsk CEO Vincent Clerc warned of an additional US$500 million in additional monthly operating expenditures. Mærsk would do its best to absorb these, but some would inevitably be inflationary, Clerc told CNBC. “There is so much we can do on reducing costs, but there is a lot we need to do on passing on these costs to customers, because it’s such a massive cost increase that we can’t shoulder it.”

The remainder of President Trump’s term will almost certainly be characterised by high prices, if a previous engagement between the West and Iran is a guide.

On that occasion in early 2011, oil prices jumped to US$120/barrel, eventually returning below US$100 levels in 2014. Now, this year’s interventions have led to damage to Middle East oil infrastructure that could take years to rectify.

In early May, the UAE announced that it would leave OPEC, providing a pressure-valve which would lower the oil price. Within hours, Iran hit oil pipelines in Fujairah.

The news is not good for ‘grey’ alternative fuels, which at present is almost all of them. These use fossil methane – which has similarly shot up in price – as a feedstock, meaning that supply of grey fuels will be constrained along with conventional fuels. For ammonia, production will be in overdrive, as many economies are running out of fertiliser. 

But according to research by ING bank, the increasing price of conventional fuels is narrowing the gap with wholly renewable ‘green’ versions of e-fuels ammonia and methanol.

In a Strait of Hormuz-open scenario, green ammonia has a vast price delta with marine gasoil, some 306% more expensive; green methanol is 85% more expensive.

In a closed-Strait scenario, green ammonia is 211% more expensive, whereas green methanol is just 42% more expensive, ING determines. Though a far-reaching geopolitical crisis has not been enough to make green fuels viable, it has contributed something toward addressing the imbalance.

The same study determines that LNG – a fossil fuel – is leading as a choice of ‘alternative’ fuel. “In May this year, 28% of the over 7,000 vessels on order are capable of running on alternative fuels, over half this share can run on LNG (15%).”

After a post-pandemic acceleration, orders for ships capable of running on alternative fuels slowed in 2025.

That, according to the ING study, led to the Trump administration, “Shifting its policy and effectively lobbying International Maritime Organization members to oppose the adoption of global measures aimed at advancing the industry’s climate ambitions and implementing a carbon pricing mechanism.”

For forward-thinking shipowners through, sails, hull lubrication, and battery-hybridisation are paying themselves back in double-quick time.

The bump in fuel costs could pose a retrofit investment stimulus far in excess of anything under discussion at IMO MEPCs.

Though financing for retrofits has always been tricky to find, shipowners may now decide to dig deeper to pay for fuel saving devices that could streamline operating costs for existing tonnage and prepare for an uncertain future.