East of Suez Market Update 12 Mar

Most prices in East of Suez ports have moved up, and availability is tight in Zhoushan.

IMAGE: An ocean-going freighter berth at port of Ningbo. Getty Images

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

• VLSFO prices up in Zhoushan ($90/mt) and Singapore ($62/mt), and down in Fujairah ($3/mt)
• LSMGO prices up in Zhoushan ($260/mt), Singapore ($142/mt) and Fujairah ($75/mt)
• HSFO prices up in Zhoushan ($72/mt) and Fujairah ($60/mt), and down in Singapore ($41/mt)
• B30-VLSFO prices up in Singapore ($73/mt)

Zhoushan’s LSMGO price has surged over the past day, reaching multi-year highs. Consequently, Zhoushan’s earlier LSMGO discounts of $90/mt to Fujairah and $57/mt to Singapore have reversed into premiums of $95/mt and $61/mt, respectively.

The sharp rise is largely driven by the increase in crude prices amid escalating tensions in the Middle East, particularly around the Strait of Hormuz, pushing bunker fuel prices higher across Asia. At the same time, tighter regional supply, cautious selling by suppliers, and stronger bunker demand from vessels calling at major hubs, such as Zhoushan, have lifted prompt premiums.

Supply constraints have also extended delivery schedules in Zhoushan. Recommended lead times for both VLSFO and LSMGO have widened to 5–10 days, up from 3–5 days last week. HSFO supply is especially tight, with most suppliers running low on inventories and refraining from offering any lead time indications for the grade, a source said.

Brent

The front-month ICE Brent contract has gained by $6.89/bbl on the day, to trade at $97.89/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent has moved closer to $100/bbl mark once again, following major disruptions in the Persian Gulf.

Over last night, two tankers caught fire after being struck by Iranian missiles in Iraqi territorial waters, according to Iraq’s national oil marketer State Oil Marketing Company (SOMO).

Iraq’s oil ports have completely ceased operations following the attacks, Reuters reported.

The latest attacks mark an escalation in the Middle East conflict, raising the number of vessels struck in the region ‌to at least 16, the report added.

“There are no signs of de-escalation in the Persian Gulf, so there is no end in sight to the disruptions to oil flows through the Strait of Hormuz,” two analysts from ING Bank said.

Downward pressure:

Brent’s price rally somewhat eased after the US Energy Information Administration (EIA) reported a surge in US crude stocks.

Commercial US crude oil inventories increased by 3.8 million bbls to 443 million bbls in the week ending 6 March, according to data from the EIA.

A rise in US crude stocks can indicate lower demand for oil and put some downward pressure Brent's price.

By Tuhin Roy and Aparupa Mazumder

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