The price premium for biodiesel over marine gas oil (MGO) has narrowed significantly in Northwest Europe, creating what marine fuel supplier Bunker One describes as more favourable conditions for operators considering biofuel blends.

According to the company, biodiesel products such as used cooking oil methyl ester (UCOME) and fatty acid methyl ester (FAME) have typically traded at a premium of $700–900 per tonne above MGO for much of the past year. Recent market movements, however, have reduced this differential to roughly $400–500 per tonne.

Bunker One said the shift has been driven by a combination of rising MGO prices and weaker values for FAME in the regional market.

The company noted that a tighter price spread can significantly improve the economics of blending biofuels with conventional marine fuels, making emissions reductions more commercially attractive for ship operators.

“When spreads tighten like this, biofuel blends can suddenly become far more competitive. We help customers understand when market conditions create real opportunities to move toward lower-carbon fuels,” said Kristian Korsgaard Pedersen, Manager of New Fuels and Carbon Markets, Bunker One.

Historically, the higher cost of biodiesel relative to conventional marine fuels has been one of the main barriers for companies assessing biofuel blends as part of their decarbonisation strategies. Bunker One described the current price differential as unusually low compared with levels seen over the past year.