The number of ships diverting around the Cape of Good Hope is increasing, as the Middle East war has reshaped global shipping routes. This boosts the role of Africa as a hub for bunkering.

Since late 2023 when Houthi attacks against Red?Sea?shipping?began, carriers have avoided the Suez Canal as well as the?Bab el-Mandeb Strait. U.S., Israeli and Strait of Hormuz closures and strikes against Iran have reinforced this shift. This has led to expectations that Africa's Bunkering Sector will benefit from the prolonged instability.

Container carriers such as Hapag-Lloyd, Maersk and CMA CGM have announced this month that they will reroute vessels around Cape of Good Hope.

Detours prolong voyage times, but allow vessels to refuel in emerging African supply areas. This accelerates investment by fuel providers and trading houses.

In recent years, existing bunker suppliers, like Denmark's Monjasa have reported a stronger demand. New entrants, including Vitol Bunker Partner Peninsula, Flex Commodities, and?Global Fuel Supply, have also announced plans to expand.

Thorstein Andreasen, spokesperson for Monjasa, said that the Red Sea security situation has had a positive impact on volumes. More vessels are now rerouting south of Africa.

Monjasa, a company that has been operating in?West Africa since nearly 20 years and supplies fuel to Fujairah reported an increase in bunkering during the first weeks of the Iran War.

Andreasen stated that "no matter what the outcome of the war, we expect the overall volatility to remain high for an extended period of time."

NEW ROUTES BECOME 'OPERATIONAL REALITY'

Along the Cape Route, the scale of the shift can be seen.

Cape Chamber of Commerce and Industry reported that diversions increased 112% by early March. This is a sign of a 'long-term change in operations,' according to carriers.

After nearly two years, it's hard to call our set-up a temporary one. It has become an adaptation to the 'new operational reality,' said Bhavan Venpati, Maersk Asia Market for Ocean Head.

He said Maersk bunkers ports in West Africa, including Tangiers.

This trend has attracted new players. Flex Commodities, based in Dubai, launched physical bunkering in Namibia's Walvis Bay & Luderitz.

Rakesh Sharma, Flex's managing director, said: "We target the growing traffic around Cape Town and the offshore markets around the region by offering an alternative to the traditional bunkering stop in the area."

He added that the company will initially focus on West Africa where there is a shortage of supply, especially offshore.

Moses Komodatam, the operations manager of Misa Energy in Ghana, said that Misa Energy is increasing its volumes to meet the rising demand for bunkering in offshore bunkering areas. Moses Komodatam, the operations manager at Misa Energy in Ghana, said that they are increasing their bunkering volume to meet rising demand in?offshore bunkering zones.

Tahra Serant, Africa Regional Manager?at the International Bunker Industry Association, explained that long-term growth prospects go beyond geopolitical disruption. Investment in port infrastructure and Africa's position on global shipping routes are supporting demand.

Mauritius Ports Authority announced at a conference in March last year that overall sales of bunker oil had almost doubled to a record level of 929,043 tons in 2024, from the 509,837 tonnes sold the year before.

PwC reported earlier this month that regulatory issues in South Africa have caused it to lose business. Its bunker volume has fallen to 80,000 tons per month by 2024, from 130,000 tons in 2023.

The risks of security and supply weigh on growth

Sources in the industry warned that African bunkering is faced with a number of obstacles, ranging from limited infrastructure and piracy to the uncertainty of supply due to the closure of the Strait of Hormuz which curtails Middle Eastern oil exports.

Fuel oil'supply' is expected to tighten in all bunkering centers, given the lack of crude and refinery runs, said LSEG senior analyst?Emril jamil.

Misa Energy's Komodatam stated that long-term challenges include infrastructure bottlenecks such as congestion in the Port of Tema, Ghana, and high costs of products because of tax regimes.

Uncertainty is also created by tax and licensing disputes.

Algoa Bay in South Africa, a major refuelling station for international shipping, saw its bunkering capacity reduced after a crackdown on taxes late in 2023.

(source: Reuters)