Americas Market Update 27 Aug

Bunker fuel prices have moved in the upwards direction, and bunker demand is strong at the Panamanian ports.

IMAGE: Container loading area in the port of Balboa. Getty Images

Changes on the day to 08.00 CDT (13.00 GMT) today:

• VLSFO prices up in Los Angeles ($51/mt), Zona Comun ($41/mt), Houston ($18/mt), Balboa ($17/mt) and New York ($16/mt)
• LSMGO prices up in Los Angeles ($87/mt), Zona Comun ($70/mt), Balboa ($38/mt), New York ($32/mt) and Houston ($20/mt)
• HSFO prices up in Los Angeles ($48/mt), New York ($13/mt), Houston ($12/mt) and Balboa ($9/mt)

The port of Los Angeles has recorded the highest price gains across all three conventional fuel grades over the past day.

On the West Coast, bunker demand is strong in Los Angeles and Long Beach this week.

VLSFO and LSMGO availability has remained tight at both ports, with lead times ranging from more than a week to 10 days. HSFO availability has been relatively better, but suppliers require at least a week’s time, a trader said.

Balboa’s VLSFO price has increased by $17/mt, while the port’s HSFO price has gained only $9/mt, widening the port’s Hi5 spread to $140/mt today from $132/mt on Wednesday.

In Panama, fuel demand has seen a slight uptick from the previous week, and availability is good for VLSFO and LSMGO which can be supplied within 3–6 days. HSFO requires longer lead times of 7–8 days.

Brent

The front-month ICE Brent contract has gained by $1.88/bbl on the day, trading at $88.56/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent’s price has felt some upward pressure amid worsening ties between the US and Iran.

Washington's sweeping economic sanctions and Tehran’s territorial chokehold on the Strait of Hormuz has left the global oil market hostage to violent, unpredictable price swings.

The US announced nearly 60 Iran-related sanctions and threatened of secondary sanctions on the Islamic Republic’s international allies, like China, earlier this week. 

Beijing dismissed Washington’s economic campaign against Iran, pulling directly into the US-Iran crossfire.

Downward pressure:

Brent’s price gains were capped by some positive news coming out of the latest Iran-Oman meeting.

Both countries’ foreign ministers held constructive talks to establish a temporary navigational corridor through the Strait of Hormuz – jointly controlled by Tehran and Muscat.

“Iran and Oman appear closer to an agreement on shipping routes through the Strait of Hormuz,” two analysts from ING Bank noted.

Market analysts have interpreted the news as a potential step toward restoring some commercial navigation through the waterway that once carried one-fifth of global seaborne oil flows.

“We would likely need to see the US lift its blockade on Iranian ports and ease sanctions on Iran before we see any move towards normalisation,” ING Bank’s analysts said.

By Gautamee Hazarika and Aparupa Mazumder

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