A Comprehensive Guide to Marine Fuels (Light Fuel Oil, Heavy Fuel Oil, Low-Sulfur Fuel Oil, Ultra-Low-Sulfur Fuel Oil, Sulphur Cap Regulations, 180 cSt, 380 cSt)

Marine fuel is categorized into diesel and heavy fuel oil. Diesel, commonly known as light oil, is further divided into MGO and MDO. Heavy fuel oil, often referred to as heavy oil (IFO or HFO), is classified according to its sulfur content into high-sulfur heavy oil (HSFO), low-sulfur heavy oil (LSFO or VLSFO), and ultra-low-sulfur heavy oil (ULSFO); it is also grouped by viscosity into three grades: 120 cSt, 180 cSt, and 380 cSt.

I. Light Oil

Light oil is relatively straightforward; let’s start with that. Light oil is primarily used for main‑engine propulsion during maneuvers such as port entry and exit, passage through narrow channels, and operations in adverse weather conditions, as well as for auxiliary engines and for starting up and shutting down boilers. There are two common types of light oil: one is marine diesel oil, abbreviated MDO—also known as heavy diesel—which is suitable for medium‑speed diesel engines and is employed when a vessel enters special sea areas; the other is marine gas oil, abbreviated MGO—also referred to as light diesel or gasoline—which has a lower viscosity than MDO and is used in high‑speed diesel engines, typically when entering designated sea areas or ports. There is also oil‑change equipment for main and auxiliary engines (e.g., during dry‑dock maintenance). . Both MGO and MDO are classified as light oils.

The price trends of MDO and MGO are shown in the figure below; their prices are broadly similar. Consequently, vessels today generally use MGO directly. According to the Clarkson database, MDO price data has not been updated since 2012. Therefore, in the future, when referring to marine light fuel oil, you may simply use the term MGO.

II. Heavy Oil

1. Introduction to Heavy Oil

Heavy oil is relatively more complex and is further classified according to indicators such as viscosity and sulfur content. What we often refer to is… Heavy oil is a blended intermediate fuel oil. , its English name is INTERMEDIATE FUEL OIL (abbreviated as IFO) or Heavy Fuel Oil (abbreviated as HFO). Therefore, both IFO and HFO refer to heavy fuel oil.

In addition, fuel oil, as a type of refined petroleum product, is a heavier residual fraction separated from crude oil after the production of gasoline, kerosene, and diesel. It is primarily derived from petroleum cracking residues and straight-run residues, characterized by high viscosity and a high content of nonhydrocarbon compounds, gums, and asphaltenes; accordingly, fuel oil is sometimes also referred to as: Marine residual fuel oil—its name is rather unappealing, but it still refers to heavy fuel oil. Due to their vastly different physical properties, ship fuel systems are divided into completely separate diesel systems and high-viscosity fuel oil systems.

2. Heavy oil with varying sulfur content

Based on their sulfur content, marine residual fuel oils (heavy oils) can be classified into high-sulfur fuel oil (HSFO), low-sulfur fuel oil (LSFO or VLSFO), and ultra-low-sulfur fuel oil (ULSFO). High-sulfur fuel oil has a sulfur content of 3.50% m/m or even 4.50% m/m or higher, low-sulfur fuel oil typically contains 0.50% m/m or less, and ultra-low-sulfur fuel oil generally contains 0.10% m/m or less. The sulfur content of MGO is also below 0.10% m/m, so ultra-low-sulfur fuel oil and MGO are classified at the same sulfur level and command similar prices.

3. Heavy oils of varying viscosities

Depending on their viscosity, marine heavy fuel oils are primarily classified into three grades: 120 cSt, 180 cSt, and 380 cSt. At present, 180CST and 380CST are the mainstream marine fuel grades on the market. So, when you see HFO 180, it refers to heavy fuel oil with a viscosity of 180 cSt; HFO 380 refers to heavy fuel oil with a viscosity of 380 cSt. The difference lies in… 380 cSt fuel is thicker and has higher viscosity; its normal operating temperature range is 130°C to 145°C. ； 180 cSt fuel oil has low viscosity and excellent fluidity; its normal operating temperature range is 110°C to 120°C. . From these characteristics, You, being smart, should be able to conclude that 380 cSt fuel is cheaper than 180 cSt fuel. In actual operations, the charterer bears the fuel costs and therefore tends to use 380 cSt fuel whenever possible. By contrast, the shipowner, concerned that higher‑viscosity fuel may harm the main engine and increase maintenance expenses, typically requires the charterer to use 180 cSt fuel instead. This creates a strategic trade‑off between the two parties. Nevertheless, both 380 cSt and 180 cSt fuels are widely used marine fuels. It is worth noting that there is no such thing as 380 cSt low‑sulfur heavy fuel oil; thus, when referring to low‑sulfur or ultra‑low‑sulfur heavy fuel oils, their viscosity is invariably 180 cSt or lower.

4. Main Oil Supply Areas

There are four major marine fuel markets worldwide: the Asia region (Singapore, China, South Korea, and Japan), the European ARA region (Amsterdam, Rotterdam, and Antwerp), the Mediterranean region (Fujairah), and the Americas (the U.S. East Coast). Among these, Singapore is the world’s largest consumer of marine fuel, followed by Northern Europe and the Middle East. Consequently, when reviewing various fuel‑price reports, you will typically find distinct pricing for fuels in locations such as Singapore, Hong Kong, South Korea, Amsterdam, Rotterdam, and Antwerp.

5. Comparison of Different Fuel Prices

To be clear, fuel oil prices will inevitably vary across different regions. However, the overall differences are minor and have little practical value for building an industry-specific knowledge system. Therefore, disregarding regional factors, this report uses only Singapore’s fuel oil prices as a benchmark.

As shown in the figure below (data as of July 25, 2024), here are the price trends for various types of fuel oils in Singapore. MGO, with a sulfur content of 0.1% or less, commands the highest price, around USD 773 per tonne; ULSFO, which has a similar sulfur level, currently trades at roughly the same price. Next is low-sulfur heavy fuel oil (LSFO or VLSFO), with a sulfur content below 0.5%, currently priced at approximately USD 628 per tonne. Finally, high-sulfur heavy fuel oil, with a sulfur content below 3.5%, is currently trading at about USD 490 per tonne. Around 2020, the price spread between high-sulfur and low-sulfur fuel was extremely narrow, so some shipowners opted not to install scrubbers at the time—now they’re probably kicking themselves.

III. Sulphur Cap Regulations

Among the current environmental regulations governing the shipping industry, limiting sulfur emissions is a key component. According to the resolution adopted at the 70th session of the Marine Environment Protection Committee (MEPC70), Effective January 1, 2020, the sulfur content of fuel used by ships worldwide must not exceed 0.5%; in certain sulfur emission control areas, the limit is 0.1%. Furthermore, in accordance with the latest requirements of the International Maritime Organization (IMO), following the entry into force of the global sulfur cap in 2020, All vessels not equipped with desulfurization systems will be prohibited from carrying fuel with sulfur content exceeding the regulatory limit.

In response to the aforementioned “sulfur cap,” countries worldwide have taken proactive measures, and companies across the shipping value chain have conducted early‑stage research and implemented a range of mitigation strategies. According to analyses by various institutions, marine fuel is likely to evolve along three distinct trajectories in the future:

1. Use low-sulfur fuel oil or marine gasoil (MGO) with a sulfur content not exceeding 0.50% m/m.

For vessels not equipped with scrubbers, when operating in Emission Control Areas (ECAs), they must use low-sulfur heavy fuel oil with a sulfur content of no more than 0.5%—as regulations permit ships to carry only such fuel. When the price differential between high‑ and low‑sulfur fuels is relatively small, as it was around 2020, opting for low‑sulfur fuel or marine gasoil (MGO) can be a viable choice. However, under current market conditions, with the price spread hovering around $150 per ton, prolonged operation in an ECA can add an additional $3,000 to $6,000 per day—depending on the vessel type—significantly eroding the economic advantage.

2. Ships shall install exhaust gas desulfurization systems and continue to use marine fuel oil with a sulfur content not exceeding 3.50% m/m.

For ships equipped with scrubbers, shipowners can continue using low‑cost high‑sulfur fuel oil, significantly reducing fuel expenses—provided they install the scrubber and associated systems. In the past two years, scrubber prices were still quite steep, ranging from US$3 to 8 million, leaving many owners hesitant. This is why, when the price gap between high‑ and low‑sulfur fuels was relatively narrow around 2020, numerous shipowners opted not to install scrubbers. However, in recent years, with the entry of Chinese scrubber manufacturers, costs have plummeted. True to its reputation as a market‑driving force, China now offers scrubbers for as little as US$1 million. Given the substantial disparity between high‑ and low‑sulfur fuel prices, such an investment typically pays for itself in less than a year—making installation an obvious choice. Moreover, it’s worth noting that, beyond the initial capital outlay, installing a scrubber also entails additional maintenance and operational costs; closed‑loop scrubbers further add expenses for chemical reagent procurement. Additionally, the wastewater and spent liquids generated by scrubbers must be treated. Currently, countries like China, the United States, Singapore, Germany, Belgium, Norway, and the United Arab Emirates explicitly prohibit the discharge of open‑loop scrubber washwater into local waters, whereas nations such as Japan and South Africa permit such discharges. Nevertheless, compared with the wide price differential between high‑ and low‑sulfur fuels, these regulatory constraints represent only a minor hurdle.

3. Select new energy sources such as liquefied natural gas (LNG) as marine propulsion fuels.

Using new‑type fuels is indeed a fundamental solution, especially today, as regulations now target not only sulfur (S) but also nitrogen (N), carbon (C), and more. A few years ago, LNG‑dual‑fuel vessels were the optimal answer to compliance with sulfur‑limiting rules, and they have since become highly mature. However, as decarbonization and zero-carbon regulations have been rolled out one after another, LNG fuel has gradually lost its appeal, prompting the industry to shift toward greener alternative fuels such as methanol, liquid ammonia, and liquid hydrogen. This falls under a separate research topic and will not be elaborated on here; a detailed analysis will be presented in a future report, should the opportunity arise. Nevertheless, while new‑type fuels address the root causes of the issue, their cost and the reliability of fuel supply chains remain pressing challenges that the entire industry must tackle without delay. I believe that, as global science and technology continue to advance, resolving these challenges is only a matter of time. Let us, with optimism and anticipation, patiently await the blossoming of progress.