East of Suez Market Update 12 June

Most prices in East of Suez ports have moved down, and availability of VLSFO and LSMGO is tight in India’s Kandla and Sikka.

IMAGE: A view of Kandla Port, Gujarat. Getty Images

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

• VLSFO prices up in Fujairah ($12/mt), and down in Singapore ($52/mt) and Zhoushan ($41/mt)
• LSMGO prices down in Zhoushan ($77/mt), Singapore ($69/mt) and Fujairah ($7/mt)
• HSFO prices down in Zhoushan ($38/mt), Singapore ($35/mt) and Fujairah ($24/mt)
• B30-VLSFO price down in Singapore ($62/mt)

Fujairah’s VLSFO price has recorded gains over the past day, while prices in Singapore and Zhoushan have declined. This increase has further widened the premiums Fujairah’s VLSFO holds over Singapore and Zhoushan.

Bunker fuel availability in the UAE port has tightened significantly, with only a limited number of suppliers currently offering product and many responding to enquiries on a selective basis, according to a trader.

For both VLSFO and LSMGO, only one supplier is understood to have available stocks in Fujairah, while most price indications are being issued only against firm enquiries. HSFO supply is somewhat less restricted, with two suppliers currently able to offer the grade.

The supply crunch is mainly the result of a lack of incoming cargoes, leaving bunker barges short of product for loading. While replenishment cargoes were expected to arrive over the past two weeks, there is still no confirmed timeline for when they will reach the port, according to the trader.

In India, VLSFO and LSMGO availability remains constrained at Kandla and Sikka, with suppliers recommending lead times of around two weeks, according to a source.

Adverse weather conditions are forecast to impact operations at several Indian ports between 12–16 May, including Kandla and Sikka. Visakhapatnam and Cochin are also expected to experience periods of high waves during the same period, which could disrupt bunkering activities.

The Mumbai OPL area is currently suspended due to unfavourable weather conditions, the source added. High waves are forecast in the port between 12–16 May, posing further operational challenges.

Brent

The front-month ICE Brent contract has declined by $5.67/bbl on the day, to trade at $86.54/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has felt some upward pressure, following weekly US crude inventory reports that indicated a substantial decline.

Commercial US crude oil inventories decreased by 7.2 million bbls to 426.5 million bbls in the week ending 5 June, according to data from the US Energy Information Administration’s (EIA).

“This [EIA report] is the seventh consecutive week of declines,” two analysts from ING Bank noted.

The American Petroleum Institute (API) reported an even larger draw of 9.1 million bbls during the same week.

A decline in US crude stocks indicates tightness in the oil market and has put some upward pressure on Brent's price.

“Commercial [US] crude oil inventories stand at a little over 426m barrels [426 million bbls], around 5% below the seasonal 5-year average,” ING Bank’s analysts said.

Downward pressure:

Brent crude’s price has plunged by more than $5/bbl following remarks by US President Donald Trump, indicating that the time and place to sign a US-Iran peace deal will be “announced shortly”.

The US President said he is halting hostilities in the Middle East region as Washington prepares to announce that details regarding a potential US-Iran peace deal soon.

“There does appear to be more positive noise around the deal this time, not just from the US, but also from other parties involved in the negotiations,” ING Bank’s analysts said.

Saudi Arabia-led oil producers group OPEC has slashed oil demand growth forecast once again, as the ongoing conflict in the Middle East continues to reshape energy consumption patterns.

The Organization of the Petroleum Exporting Countries (OPEC) has cut its global oil demand growth projection for 2026 to about 1.0 million b/d – around 200,000 b/d lower than its previous estimate.

“Most other agencies forecast a contraction in demand this year amid supply disruptions in the Middle East,” ING Bank’s analysts added.

By Tuhin Roy and Aparupa Mazumder

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