East of Suez Market Update 12 Aug

Prices in East of Suez ports have moved in mixed directions, and availability of all grades is tight in Fujairah.

IMAGE: Bunker barge at berth in Fujairah, UAE. Port of Fujairah

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

• VLSFO prices down in Fujairah ($21/mt), Singapore ($20/mt) and Zhoushan ($16/mt)
• LSMGO prices up in Zhoushan ($5/mt), and down in Fujairah ($18/mt) and Singapore ($4/mt)
• HSFO prices up in Singapore ($7/mt), and down in Fujairah ($8/mt) and Zhoushan ($6/mt)

Fujairah’s VLSFO price has fallen by $21/mt in the past day, the steepest decline among the three major Asian bunker ports. A lower-priced 50-150 mt VLSFO stem, fixed in Fujairah over the past day, has contributed to weighing the benchmark down. Fujairah’s VLSFO price is now at discounts of $33/mt to Singapore and $9/mt to Zhoushan.

Renewed tensions between the US and Iran around the Strait of Hormuz continue to put pressure on bunker fuel supply in Fujairah. Availability of VLSFO and LSMGO remains tight, largely unchanged from last week, with only a limited number of suppliers able to offer LSMGO. HSFO supply also remains tight.

Supply conditions are more comfortable at the nearby UAE hub of Khor Fakkan, where both VLSFO and HSFO remain readily available. Despite the latest regional escalation, bunker demand has picked up at both Fujairah and Khor Fakkan, a Middle East-based source said.

Brent

The front-month ICE Brent contract has lost by $0.71/bbl on the day, to trade at $89.21/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has felt upward pressure on the back of escalating tension between the US and Iran.

Tehran has reiterated that the Strait of Hormuz will remain closed unless Washington agrees to the six sweeping conditions it announced earlier this week.

The demands include a total cessation of all US military action in the region and the immediate withdrawal of all US naval and air forces from around Iran, among others.

“The likelihood of a deal to reopen the Strait of Hormuz remains low,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

Brent’s price gains were capped after the American Petroleum Institute (API) reported a sizeable increase in US crude stocks.

US crude oil inventories increased by 9.07 million bbls in the week ending 7 August, against market expectations of a 500,000-bbl draw.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

By Tuhin Roy and Aparupa Mazumder

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