Global Very Low Sulphur Fuel Oil Market to Reach US$155.6 Billion by 2030

The global market for Very Low Sulphur Fuel Oil estimated at US$57.9 Billion in the year 2024, is expected to reach US$155.6 Billion by 2030, growing at a CAGR of 17.9% over the analysis period 2024-2030. Residual Fuel Oil, one of the segments analyzed in the report, is expected to record a 16.6% CAGR and reach US$80.2 Billion by the end of the analysis period. Growth in the Blended Fuel Oil segment is estimated at 19.0% CAGR over the analysis period.

The U.S. Market is Estimated at US$15.8 Billion While China is Forecast to Grow at 23.4% CAGR

The Very Low Sulphur Fuel Oil market in the U.S. is estimated at US$15.8 Billion in the year 2024. China, the world`s second largest economy, is forecast to reach a projected market size of US$34.3 Billion by the year 2030 trailing a CAGR of 23.4% over the analysis period 2024-2030. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at a CAGR of 13.4% and 16.1% respectively over the analysis period. Within Europe, Germany is forecast to grow at approximately 14.3% CAGR.

Global Very Low Sulphur Fuel Oil (VLSFO) Market - Key Trends & Drivers Summarized

Why Has VLSFO Become Central to Global Maritime Fuel Supply?

Very Low Sulphur Fuel Oil (VLSFO) refers to marine fuel with a sulfur content of 0.5% or less, introduced as the primary compliance solution following the International Maritime Organization’s (IMO) 2020 regulation on marine sulfur emissions. This regulation significantly reduced the global sulfur cap from 3.5% to 0.5%, prompting widespread adoption of VLSFO in ocean-going vessels. As a blended product typically made from vacuum gas oil and desulfurized residual fuels, VLSFO offers compatibility with existing ship engines without requiring major retrofits, making it an immediate compliance pathway for fleet operators.

Unlike marine gas oil (MGO), which is more refined and expensive, VLSFO provides a cost-effective alternative with similar environmental benefits. The majority of commercial vessels not equipped with exhaust gas cleaning systems, or scrubbers, transitioned to VLSFO after the sulfur cap came into effect. This shift has redefined global fuel oil trading patterns and introduced new supply chain dynamics in refining, blending, storage, and marine bunkering operations across major ports.

How Are Refiners and Bunker Suppliers Adapting to Changing Fuel Specifications?

To meet VLSFO demand, refiners have had to modify production processes to blend compliant fuel grades while maintaining viscosity and combustion stability. This involves blending low-sulfur distillates with residual components to produce fuels that meet ISO 8217 specifications. Compatibility and stability concerns are actively addressed by testing for sedimentation, cold flow properties, and flashpoint values, as minor variations in blend components can lead to operational issues onboard ships.

Port authorities and bunker suppliers have adapted by expanding storage and distribution infrastructure for VLSFO. Segregated storage tanks, calibrated flow meters, and quality testing labs are being installed at key bunkering hubs to ensure consistent delivery of compliant fuels. Bunker delivery note protocols and fuel traceability systems have also improved, allowing ship operators to verify sulfur content and blending practices. These supply-side adjustments have become critical to maintaining operational reliability and regulatory compliance across the marine fuel supply chain.

What Are the Operational Considerations and Challenges Linked to VLSFO Usage?

VLSFO presents several operational considerations, especially around fuel handling and engine compatibility. Differences in viscosity and density compared to traditional heavy fuel oils require changes in shipboard fuel management practices, including heating, purification, and injection timing. Concerns around lubricant compatibility and cylinder wear have prompted closer monitoring of engine performance when operating on VLSFO, particularly for older vessel engines.

Cold flow properties are another concern in colder climates, where paraffinic blends may result in wax formation and clogged filters. To address this, fuel testing prior to bunkering and onboard fuel treatment have become standard practices. Shipowners are investing in crew training and upgraded monitoring systems to mitigate risks associated with fuel variability. Despite these challenges, the marine industry has largely adjusted to the widespread use of VLSFO, aided by knowledge sharing, manufacturer guidance, and increased fuel quality transparency.

What Market Forces Are Supporting Continued Demand for VLSFO?

Growth in the very low sulphur fuel oil market is driven by several factors related to maritime emission regulations, non-scrubber vessel operations, and evolving fuel supply chains. Sustained enforcement of IMO 2020 standards and rising environmental compliance costs are ensuring continued reliance on VLSFO for a large segment of the global shipping fleet. Limited retrofit rates for scrubber systems and delayed adoption of LNG propulsion are maintaining VLSFO’s role as the default fuel for regulatory compliance. Expansion of global seaborne trade, particularly in containerized and bulk cargo segments, is supporting steady bunkering volumes. Refiners and terminal operators are investing in customized blending and storage infrastructure to meet port-specific demand patterns, strengthening regional supply reliability. Additionally, increased oversight on fuel quality and traceability is reinforcing shipowner confidence in VLSFO, supporting its continued adoption across diverse vessel classes and trade routes.