Algal Oil: A Glimpse Into CFI's Upcoming Report on the Leading Fish Oil Alternative

In 2023, fish oil prices spiked due to the El Niño-Southern Oscillation (ENSO) (‘ El Niño’ for short). Warm ocean temperatures in the Eastern Pacific Ocean caused by El Niño led to less fish biomass and reduced Peruvian fish oil output by over 50%. Shocks to the Peruvian fish oil sector reverberated worldwide, leaving aquafeed producers searching for a viable lipid alternative. As fish oil supplies tightened, algal oil stepped in to successfully meet lipid needs in aquafeeds. Our upcoming report explores how algal oil is a scalable, sustainable, and safe fish oil replacement for aquafeed.

What is algal oil?

Algal oil is an oil extracted from microalgae. Algal oils are nutrient-dense and often contain high levels of essential omega-3 fatty acids, like eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA). In aquafeed (feed for farmed fish), algal oil can be used to replace fish oil. 

How is algal oil produced? 

Algal oil is produced by extracting oil from cultivated microalgae. There are three main types of microalgae species that are used to produce algal oil:

1. Heterotrophic Microalgae: Derives energy from organic carbon sources in the absence of light. 

   
   

2. Phototrophic Microalgae: Derives energy from sunlight and carbon from CO₂ via photosynthesis.

   
   

3. Mixotrophic Microalgae: Derives energy from photosynthesis and organic carbon sources simultaneously or sequentially.

   
   

After species selection, algal oil production has three main steps: 

1. Cultivation. Microalgae are grown at scale in heterotrophic or phototrophic systems. Heterotrophic systems use fermenters to produce algal cells. Phototrophic systems use either closed photobioreactors or open ponds to produce algal cells. 

   
   

2. Harvesting. One sufficient biomass is achieved, the algal culture undergoes separation and/or cell disruption depending on the production system.

   
   

3. Oil extraction. Lipids rich in omega-3 fatty acids (EPA and DHA) are released from the algal biomass using mechanical, chemical, or enzymatic extraction methods to produce crude algal oil. 

   
   

Market snapshot

Global production of algal-based EPA and DHA reached an estimated 20,000 tonnes in 2025. Industry forecasts suggest volumes could double or triple by 2030, with aquafeed expected to remain the leading demand driver. Algal oils are approved for use in aquafeed in several key markets, including the United States and Europe. 

As new production lines mature, manufacturing efficiency improves, and circular feedstocks replace current sugar inputs, price gaps between algal oil and fish oil are decreasing. Algal oil has moved from pilot use to recurring inclusion in commercial salmon diets, making it one of the most successful novel ingredients introduced to aquaculture. Major aquafeed producers—including Skretting, BioMar, Cargill, and Mowi—now routinely include algal oil in feed formulations.

A scalable, sustainable, & safe alternative to fish oil

As aquaculture production grows, the aquafeed industry will need a sustainable alternative to fish oil. Volatile prices, supply shocks, and growing scrutiny of marine biodiversity impacts have made fish oil an increasingly scarce commodity in aquafeed production. Algal oil is a promising fish oil replacement, as it combines nutritional equivalence with superior safety and environmental performance, offering a pathway to decouple aquaculture growth from marine resource limits.

Insights from our forthcoming State of the Industry report

Our upcoming State of the Industry report unpacks the science and market momentum behind algae-based omega-3s in aquafeed — and what they mean for the future of feed. We assess the promise of algal oil as an emerging ingredient, identify barriers to scale, and highlight next steps for industry stakeholders. Topics include:

• Nutrition and quality

• Commercial growth and adoption

• Regulation and certification approvals

• Safety and sustainability

• Paths forward

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