In recent commentary with S&P Global, Peninsula shared its perspective on the changing dynamics shaping marine biofuel demand in Europe, particularly in the ARA region.
As reported by S&P Global’s Max Lin, the ongoing conflict in the Middle East has altered bunker fuel economics. Since the war began on 28 February, disruption risks in the Strait of Hormuz have pushed up oil prices, making conventional, oil‑based fuels less competitive against sustainable alternatives such as biofuels. The impact has been most pronounced in middle distillates, with S&P Global Commodities at Sea data showing that approximately 248,600 barrels per day, around 12% of Europe’s middle‑of‑the‑barrel products, originated from the Persian Gulf in 2025.
These pressures are now clearly reflected in market pricing. S&P Global Energy’s CERA estimates, based on Platts assessments and incorporating EU Emissions Trading System compliance costs, show that the price spread between used cooking oil methyl ester‑based B100 and 0.1% sulphur marine gasoil in ARA shifted from an average premium of around USD 495 per metric tonne in February to a discount of approximately USD 22 per metric tonne by 27 March. In principle, this creates a compelling commercial case for biofuels, yet adoption continues to lag the economics.
From Peninsula’s perspective, this gap is increasingly visible in practice. While the company is seeing a notable, price‑led increase in biobunker deliveries in ARA, particularly for B100, biofuels remain significantly underutilised when set against their commercial and regulatory advantages. As highlighted in S&P’s analysis, many shipping companies are currently prioritising the availability and volatility of conventional fuels, with compliance timelines and operational disruption often delaying decisions to switch.
In Peninsula’s experience, this points to a broader challenge: the benefits of biofuels are not always fully understood. Even when bioproducts are priced competitively, and in some cases below conventional fuels, they can be perceived as complex, unfamiliar or administratively burdensome, creating hesitation among end users. This broader discussion increasingly includes bioLNG alongside liquid biofuels, particularly where vessel design and fuel pathways allow, with Peninsula supplying bioLNG via its LNG bunker vessel, Levante LNG.
To help address this, Peninsula continues to frame biofuels through a clear, practical lens; the biofuel trifecta:
- Energy performance: Biofuels offer a competitive calorific value and can be used as drop‑in solutions within existing vessel operations.
- Carbon value: Biofuel use can support voluntary emissions reduction and carbon insetting strategies, with potential benefits depending on an operator’s internal policies and reporting approach.
- Regulatory alignment: Biofuels support mandatory emissions reduction requirements under frameworks such as EU ETS and FuelEU Maritime, helping vessel operators manage current and future regulatory exposure.
Supported by continued investment in sourcing, blending and physical supply, including in key hubs such as ARA and the Med, Peninsula sees biofuels as an established and scalable solution available today. While broader uptake may lag in the short term as operators navigate volatility and compliance processes, the underlying case for biofuels continues to strengthen, with pricing, regulation and infrastructure increasingly aligned.
Read the full article on S&P Global (subscription required).