June 2026 | FuelEU Index & Market Commentary

Executive Summary FuelEU Index & Market Commentary | June 2026

June extended the sharp post-compliance-cycle repricing observed in May, with FuelEU surplus prices moving further lower as the market continued to adjust to early-cycle 2026 conditions. The average trade price closed at 111.39 EUR/t CO₂e on 30 June, while the monthly average declined to 123.60 EUR/t CO₂e. BetterSea’s newly introduced volume-weighted average recorded 120.49 EUR/t CO₂e for the month, offering a more representative view of executable levels across larger transactions.

The continued decline was primarily driven by ongoing uncertainty around the Strait of Hormuz. As described previously, high VLSFO levels narrowed the economic differential between fossil fuels and biofuels, reducing the perceived cost of surplus generation and placing downward pressure on surplus valuations.

Toward the end of June, however, VLSFO prices began to normalise, with VLSFO in Rotterdam falling to 597.50 USD/t on 30 June. FuelEU surplus prices have not yet materially adjusted to this shift. As a result, current price levels may represent a temporary and potentially attractive procurement window for buyers before surplus valuations recalibrate to a more normalised fuel-price environment.

Market Dynamics & Trends

June market activity reflected a continuation of the early-cycle repricing that began after the close of the 2025 compliance period. Buyers retained significant optionality and continued to benefit from the absence of near-term compliance pressure, while sellers remained focused on stimulating liquidity at the beginning of the 2026 trading cycle. This dynamic resulted in a further material decline in price levels. The average closed the month at 111.39 EUR/t CO₂e.

Fuel economics remained the dominant external driver. Elevated VLSFO prices reduced the relative cost differential between fossil fuels and biofuels, lowering implied surplus generation costs and strengthening buyers’ negotiating position. Market participants increasingly used this mitigation-cost reference point to push surplus prices lower, even though access to such economics remains uneven across the fleet.

Demand behavior evolved over the month. Early June was characterized by selective engagement and price discovery, with buyers testing sellers’ willingness to transact at lower levels. In the second half of the month, execution increased as buyers began to recognize the attractiveness of prevailing price levels. This shift suggests that while buyers remain disciplined, current pricing is increasingly converting interest into transactions.

Volume-Weighted Index & Market Structure

June marked the first month in which BetterSea reports a volume-weighted average alongside the existing non-weighted daily average. This additional metric is increasingly relevant as transaction size has become a material determinant of clearing levels.

The June data confirms the value of this dual-index approach. The non-weighted monthly average was 123.60 EUR/t CO₂e, while the volume-weighted average was lower at 120.49 EUR/t CO₂e. This indicates that larger transactions cleared below the headline average, consistent with an early-cycle market in which larger buyers retain greater negotiating leverage.

The distinction between non- and volume-weighted pricing is particularly relevant in the current environment. Smaller trades can temporarily lift the headline daily average, while larger blocks may provide a more accurate indication of executable market depth. The new weighted index therefore offers a more robust reference point for participants assessing achievable levels in size.

Market Context

The June decline should be viewed as part of the 2026 market reset rather than a deterioration in underlying demand. Following the close of the first compliance cycle, the market has shifted into a longer-dated procurement environment where buyers have time, optionality, and increased price discipline.

However, late-June fuel-price movements introduce an important change in the balance of risk. As VLSFO in Rotterdam moved materially lower from the Strait of Hormuz highs, implied mitigation costs began moving back toward levels more comparable with the 2025 trading environment. During 2025, VLSFO prices generally ranged between 400 and 500 USD/t, while the end-June level of 597.50 USD/t compared to the beginning-June level of 726 USD/t already represented a meaningful move in that direction.

Surplus prices have not yet reflected this adjustment. Early July indications suggest that the market has continued to soften, with the 2 July weighted average at 104.37 EUR/t CO₂e. This lag creates a potentially short-lived dislocation: buyers currently benefit from surplus prices still anchored to the prior high-fossil-price environment, while fuel markets are already beginning to normalize.

For buyers with defined 2026 exposure, the current environment therefore presents a constructive entry point. The combination of lower surplus prices, increasing transaction availability, and a delayed pricing response to changing VLSFO dynamics may offer a favourable window to secure coverage before surplus valuations adjust to higher implied mitigation-cost assumptions.

Overall, June reflects a market still shaped by early-cycle optionality but increasingly exposed to a potential repricing trigger from normalising fuel markets. The near-term opportunity lies in the timing mismatch between surplus price formation and underlying mitigation-cost dynamics.

FuelEU Index & Market Commentary | June 2026 | 01/07/2026

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