East of Suez Market Update 1 June

Prices in East of Suez ports have moved up, and VLSFO availability is tight in China’s Zhoushan.

IMAGE: Aerial view Zhoushan City, Zhejiang Province. Getty Images

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

• VLSFO prices up in Fujairah ($69/mt), Singapore and Zhoushan ($19/mt)
• LSMGO prices up in Zhoushan ($63/mt), Fujairah ($48/mt) and Singapore ($24/mt)
• HSFO prices up in Singapore ($28/mt), Zhoushan ($7/mt) and Fujairah ($4/mt)
• B30-VLSFO price up in Singapore ($6/mt)

Fujairah’s VLSFO price has climbed by $69/mt over the weekend, marking the sharpest increase among the three major Asian bunker ports. Consequently, Fujairah’s VLSFO now commands substantial premiums of $219/mt over Zhoushan and $218/mt over Singapore.

Bunker availability in Fujairah remains tight, with all offers subject to firm enquiry. Demand has dropped sharply as many vessels continue to await transit through the Strait of Hormuz. According to a trader, VLSFO and LSMGO supplies in the port are “almost dry,” while HSFO inventories are also nearing depletion.

Meanwhile, Zhoushan’s LSMGO price has surged by $63/mt, marking the largest increase among the three ports. Despite the jump, Zhoushan’s LSMGO remains at a discount of $330/mt to Fujairah, while commanding a premium of $138/mt over Singapore.

In Zhoushan, LSMGO and HSFO availability has improved slightly, with recommended lead times easing to 4–7 days from 5–8 days last week. However, VLSFO supply remains tight as several suppliers continue to face low stock levels. The situation has persisted for around a month, according to a source, with recommended lead times holding steady at 7–10 days.

Brent

The front-month ICE Brent contract has gained by $0.64/bbl on the day from Friday, to trade at $94.15/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has risen at the start of the week following US airstrikes on Iranian sites over the weekend.

The US Central Command (CENTCOM) has once again targeted radar and command sites for drones in Iran – raising concerns of the fragile ceasefire to collapse.

Meanwhile, the Strait of Hormuz continues to remain closed, “disrupting more than 15mb/d [15 million b/d] of world oil supply,” ANZ Bank’s senior commodity strategist Daniel Hynes noted.

The US military called the action as “self-defense” strikes, after Iran shot down a US MQ-1 drone that was operating in the Persian Gulf.

Several vessels trying to transit the Strait have “come under attack in recent days, underscoring the risks that remain for shipowners and crew,” Hynes added.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US rose by four to 429 units last week.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

By Tuhin Roy and Aparupa Mazumder

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