The price of biodiesel for shipping has fallen to an all-time low this week and is now cheaper than most conventional marine fuels, as the conflict in the Middle East drives up diesel costs. The cost of the alternative fuel at the port of Rotterdam, home to the world’s largest cluster of biofuel production, fell as low as $985 a tonne on Monday, according to pricing agency Argus, the lowest on record and down from as much as $1,388 in July, as producers cut prices to boost sales and help meet their EU emissions targets. It has since rebounded to $1,240.

That comes as the cost of marine gasoil, a key shipping fuel, has soared to $1,528.50 per tonne this week from $714.50 per tonne just before the start of the Iran war in February, amid growing disruption to supplies. When the cost of complying with EU limits on carbon emissions for shipping fuels and the price of maritime carbon permits was included, biodiesel was cheaper than “almost all” conventional shipping fuels, Argus said.

This “surprising new development” should encourage shipowners “to rethink their fuel strategies, as bio-marine fuels can often be cheaper than marine gasoil after accounting for the net emissions savings available under EU schemes”, said Madeleine Jenkins, European biofuel pricing specialist at Argus. Biofuels can be used in most vessels with few modifications, either as a blend with conventional fuel or in their pure form, and have emerged as one of the sector’s most readily available options for cutting emissions.

A significant proportion of the biodiesel sold in Rotterdam is produced from waste products such as palm oil mill effluent from south-east Asia and food waste oil, meaning that biodiesel has largely been unaffected by this year’s rise in fossil fuel prices. Sales of marine biodiesel blends in Rotterdam rose sharply year on year in the second quarter of 2026 and more than doubled from the previous three months, driven by surging diesel prices pushed up by both the Iran war and the introduction of Dutch rules implementing the EU’s Renewable Energy Directive III.