Hormuz turns clean shipping into an energy security trade

The Hormuz disruptions introduced a disruptive scenario: Conventional marine fuel can become unavailable in key markets — and expensive — as domestic demand absorbs export supply under stress, according to Rystad Energy.

The market has already started repricing that risk: Singaporean very low sulfur fuel oil and low sulfur marine gas oil (LSMGO) prices surged on supply-risk perception rather than confirmed shortages — with forecasts pointing to LSMGO possibly breaching USD 1.2k per ton before easing — with normalization expected mid-next year.

The price action told a useful — if incomplete — story: Conventional fuels reacted sharply because they are heavily traded and exposed to real-time risk repricing. In contrast, alternative fuels appeared more stable — less because they are resilient, and more because market depth and trading liquidity remains limited.

A substitute makes sense now: The shock around Hormuz has strengthened a more durable rationale for alternative fuels — one that doesn’t depend on whether regulators hold the line, but instead reflects concerns about access. Alternative fuels are emerging as a hedge against a system where fuel availability can no longer be taken for granted.

At a time where policy uncertainty deepens: The International Maritime Organization’s NetZero Framework is heading into October’s Marine Environment Protection Committee session under pressure from the US, Japan, and major oil producers — raising the risk of a diluted framework that creates uncertainty without delivering a clear carbon price.

But each substitute is playing a different game: Biodiesel faces tightening feedstock competition — particularly from sustainable aviation fuel mandates. Bio-LNG works where shipowners can tap surplus unit markets, but its use remains limited across fleets. Biomethanol is gaining traction on scale —led by China — even as supply lags.

The gap between what is technically viable and what can scale commercially remains the key constraint. E-methanol retains engine compatibility advantages, but its higher production costs limit near-term expansion without policy support. Ethanol is credible on select non-EU routes — although it remains niche, Meanwhile, ammonia is still behind — requiring both policy support and infrastructure buildout that energy security logic alone are unlikely to deliver.

Previous energy shocks have driven structural change rather than temporary dislocation — and this one arrives with some alternative technologies already commercially available. The constraint is no longer invention, its infrastructure and capital deployment, both of which become easier to justify under security risk.

For shipowners, voyage planning, bunkering, and fuel sourcing now carry supply reliability risk — alongside compliance exposure. The advantage shifts to owners who can build flexibility into their fuel mix and sourcing strategy. That turns fuel into a competitive lever — early movers who secure diversified supply chains and optionality across fuel types are better positioned to absorb shocks.