The escalation of the conflict involving Iran has had a profound impact on maritime logistics, particularly regarding fuel costs. As the Global 4 Ports Average Very Low Sulfur Fuel Oil (VLSFO) price rose dramatically from $506 per metric ton on 27 February 2026 to $961.5 per metric ton by 19 March 2026, shipping carriers responded by implementing Emergency Bunker Adjustment Factor (eBAF) surcharges. This move has significantly altered the landscape for shippers, leading to increased transportation costs and logistical challenges.
Fuel Price Surge and Carrier Response
The sudden spike in VLSFO prices, growing by nearly 90% within a short period, compelled ocean carriers to turn to eBAFs as a strategy to recover escalating fuel costs. Prior to the conflict, the average Bunker Adjustment Factor (BAF) values across East-West headhaul trades were relatively stable. Reportedly, these values rose from $449 per 40ft dry container in 3Q-2025 to $470 in 4Q-2025, only to decline to $419 by 1Q-2026. However, the fallout from the Iran conflict became apparent in 2Q-2026, with total fuel-related charges increasing dramatically. Standard BAF decreased to $406 per 40ft dry, failing to mirror the immediate rise in bunker prices, resulting in total charges escalating to $798 per 40ft dry due to the introduction of eBAFs.
Future Outlook and Market Implications
As the situation evolves, the rationale behind maintaining eBAFs appears to be diminishing. The temporary agreement between the US and Iran has reduced immediate fears related to disruptions in oil and bunker fuel markets. Furthermore, VLSFO prices have seen a correction, retreating to $764.5 per metric ton by 18 June 2026. This decline presents an opportunity for shippers to negotiate the removal of eBAFs and to revert to conventional indexed quarterly BAF mechanisms. Carriers like Hapag-Lloyd have indicated their intention to withdraw emergency surcharges once the new BAF rates take effect in July.
Shippers are urged to remain vigilant regarding the implications of surcharge structures. The potential for duplicate recovery of fuel costs — first through emergency measures and later in standard BAF calculations — poses a significant risk. The ongoing volatility of fuel prices can place substantial pressure on supply chain budgets, impacting margins and complicating carrier contract negotiations. Close observation of market conditions will be crucial in navigating this challenging landscape.
Behind the Headline
The operational challenges highlighted by the Iran conflict underscore the intricate relationship between bunker prices and shipping costs. For carriers, the implementation of eBAFs is an immediate response to market volatility, but shippers must ensure that such measures do not become permanent fixtures within their cost structures. The market’s adjustment is ongoing, and stakeholders should prepare for potential fluctuations as economic and geopolitical factors continue to play a critical role in shaping fuel pricing dynamics. Moving forward, it will be essential for shippers to leverage their negotiating power in discussions with carriers to advocate for transparency and fairness in fuel cost recovery practices.
