Op-Ed: The high cost of volatility: who pays when shipping’s LNG bet fails

From SeaNews

Authored by MARBEM Member: Equal Routes

Originally published in SeaNews

The escalation of conflict in the Middle East sent bunker fuel prices surging 70–90% overnight and has remained elevated for 4 weeks. LNG took the hardest hit. In Rotterdam and Sines, prices doubled, wiping out the competitive spread against Marine Gas Oil that operators had been counting on. A narrow discount may still exist on paper, but the past few weeks demonstrates just how fast that math can change.

For fleet managers and fuel procurement teams, this is not a one-off pricing shock. Oil & Gas crises are a structural problem that keeps repeating. LNG—comprising 85-95% methane, a greenhouse gas roughly 80 times more potent than CO2 over 20 years—thrives under policy uncertainty. Yet its economic and environmental case grows more fragile with every geopolitical shock, and the question of who bears that risk is one the industry can no longer afford to defer.

The geopolitical trap

This has happened before. After Russia invaded Ukraine in 2022, Rotterdam LNG bunker sales fell nearly 60% as dual-fuel operators cut their losses and switched back to conventional fuels. The economics simply stopped working.

We are in another version of that cycle now. As of March 2026, over 300 oil and LNG tankers are stuck in the Strait of Hormuz. Charter rates for LNG carriers have jumped 650%. Operators running dual-fuel vessels are once again weighing whether the "transition fuel" still makes sense when a 15–20% premium over MGO is enough to abandon it entirely.

The geopolitical risks of fossil fuel dependence are unavoidable, and this crisis underscores that LNG is not just correlated to the broader fossil fuel market but is often more exposed to volatility.  That pattern should give pause to anyone evaluating LNG as a long-term fleet strategy. It raises serious questions about the material commitment to decarbonization that LNG actually represents. Zero-emission fuels and infrastructure are not just climate solutions — they are a necessary hedge against persistent instability in fossil fuel markets

The money tells a different story

A recent report showed over $21.9 billion in public finance has gone into maritime LNG projects since 2013. More than $8 billion of that was labeled "green" under ambiguous finance frameworks. Yet the companies that built this infrastructure are now looking for the exit. Shell and Mitsubishi are exploring the sale of major stakes in LNG Canada, a facility that only opened in mid-2025.

This asymmetry is revealing: private investors are retreating because they understand LNG's regulatory and climate liability. While they lock in profits now, the public is left to foot the bill later—and the operators and port infrastructure left holding these assets may not have the same flexibility to walk away.

This is capital that should be future-proofing the industry through zero-emission infrastructure. Instead, it is being used to subsidize a fuel that carries a well-documented risk of becoming a stranded asset as the regulatory window on fossil fuels narrows.

The regulatory picture is tightening

In April, the International Maritime Organization (IMO) Intersessional Working Group on GHG Emissions (ISWG-GHG 21) and 84th Marine Environment Protection Committee (MEPC 84) meetings will take up default Well-to-Tank emission factors under its 2024 Life Cycle Assessment guidelines. This matters operationally. A 2024 Nature study found upstream methane emissions in the U.S. running at roughly 2.95% of production, about three times higher than official estimates. Submissions to the IMO flag that Well-to-Tank LNG emissions may be underreported by 54% in Canada and 30% in the U.S.

If the IMO adopts default emission factors that reflect actual upstream leakage and methane slip, LNG's compliance profile changes significantly– and operators who locked into LNG infrastructure on current figures could find their fuel strategy out of step within this decade. Scientific integrity demands nothing less. If these emissions factors fail to capture the full material impact of fuels, the IMO risks inadvertently favouring high-emitting fossil fuel pathways over truly sustainable alternatives. 

What this means for fleet decisions today

The spot market volatility is the visible problem. The longer-term risk is building a fleet strategy around a fuel whose cost, supply stability, and regulatory standing are all in question simultaneously.

The maritime sector does not need more “bridge” fuels that lead only to a pier of stranded assets. The operators who recognize that early, and direct capital toward zero-emission infrastructure and fuels instead, are the ones who avoid inheriting a stranded asset problem that someone else designed.

The IMO meetings in London this April are an opportunity to get the science right. For operators, the more pressing question is whether the fleet decisions being made today will still hold up when that science is fully priced in.