Bunker fuel is what ships burn. It is the largest variable cost of a voyage, it feeds directly into TCE and therefore into freight rates, and it is a refined product market in its own right with its own supply, specification and pricing.
The specification changed materially when the global sulphur limit for marine fuel was reduced. Before, most vessels burned high-sulphur fuel oil, essentially the bottom of the barrel. After, the compliant options are very low sulphur fuel oil, marine gasoil, or continuing to burn the high-sulphur product with an exhaust scrubber installed. That created a spread between compliant and non-compliant fuel that is a live economic decision for every owner.
The scrubber economics are a straightforward payback calculation, and they are the reason the spread matters beyond the shipping industry. A scrubber costs capital and consumes some fuel to run; it pays back through the discount on high-sulphur fuel. When the spread is wide, scrubber-fitted vessels earn materially more, so they command a premium in the charter market, and demand for high-sulphur residue is supported. When it narrows, the advantage erodes.
Bunker prices are quoted at specific ports, and the spread between ports is substantial and persistent. Singapore, Rotterdam and Fujairah are the main pricing points, and the differences between them reflect local supply, local demand and local logistics rather than a single global price. Route economics therefore depend on where a vessel bunkers, which is a real operational decision rather than a modelling detail.
The other reason bunkers matter analytically is that they are embedded in the Worldscale flat rate calculation as an assumption. When bunker prices move a long way during a year, the flat rates become stale and the market compensates by trading further from WS100, which is why a very high or low WS level partly reflects fuel costs rather than pure freight market strength.