East of Suez Market Update 1 July

Most bunker benchmarks in East of Suez ports have moved down, and availability has improved in the UAE ports of Fujairah and Khor Fakkan.

IMAGE: Container ships and gantry cranes at the Port of Khor Fakkan, UAE. Sharjah Ports

Changes on the day to 17.00 SGT (09.00 GMT) today:

• VLSFO prices down in Fujairah ($18/mt), Singapore ($17/mt) and Zhoushan ($9/mt)
• LSMGO prices down in Fujairah ($82/mt), Singapore ($40/mt) and Zhoushan ($25/mt)
• HSFO prices down in Singapore ($9/mt), Fujairah ($8/mt) and Zhoushan ($6/mt)
• B30-VLSFO price up in Singapore ($8/mt)

Fujairah’s VLSFO price has fallen by $18/mt over the past day, marking the steepest decline among the three major Asian bunker ports. The drop was driven by a lower-priced 150–500 mt VLSFO stem fixed during the day. Despite the decline, Fujairah’s VLSFO price remains at a significant premium of $146/mt over both Singapore and Zhoushan.

Bunker fuel availability has improved across all major grades in Fujairah, with several suppliers now able to accommodate prompt delivery requests. The improvement follows the signing of a memorandum of understanding between Iran and the US, which includes the reopening of the Strait of Hormuz.

Prior to the agreement, suppliers were contending with tight cargo availability as lower imports limited replenishment volumes for bunker barges. Supply has since improved after a small batch of cargoes arrived in recent days, with additional deliveries expected shortly, according to a Middle East-based source.

The source also noted that bunker demand in Fujairah has picked up.

Most suppliers in Fujairah are now able to offer prompt VLSFO stems, while a smaller number have LSMGO available. HSFO remains relatively tight, although some suppliers continue to offer the grade.

Supply conditions have also improved at the neighbouring UAE bunker hub of Khor Fakkan, where availability of both VLSFO and HSFO has improved.

Brent

The front-month ICE Brent contract has declined by $1.07/bbl on the day, to trade at $71.82/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has felt some upward pressure after the American Petroleum Institute (API) reported a sizeable decline in US crude stocks.

US crude oil inventories recorded a decline of 6.1 million bbls in the week ending 26 June, according to estimates from the API.

A fall in US crude stockpiles is generally seen as a sign of stronger oil demand and can provide upward support to Brent’s price.

“Numbers overnight from the API show that US crude oil inventories continue to fall despite some normalisation in Persian Gulf flows,” two analysts from ING Bank noted.

Downward pressure:

The global oil market has continued to remain optimistic on a supply recovery from the Persian Gulf, despite recent fire exchanges between the US and Iran, market analysts said.

Indirect talks between Washington and Tehran are expected to continue in Doha, Qatar, this week, adding some positive outlook to the ceasefire negotiations.

“Oil prices came under further pressure… dragged down by growing confidence that Persian Gulf crude flows are on the mend,” ING Bank’s analysts said.

There has been a small uptick in inbound vessel traffic in the Strait of Hormuz, suggesting that vessel owners are becoming increasingly confident about moving into the Persian Gulf.

The market has “seen a tentative pick-up of vessels transiting the Strait of Hormuz,” ANZ Bank’s senior commodity strategist Daniel Hynes said, adding about 24 ships, including oil and LNG tankers, travelled through the key waterway on Monday.

By Tuhin Roy and Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online