East of Suez Market Update 12 May

Bunker fuel prices across all grades in East of Suez ports have largely followed Brent’s upward trend, and availability across all grades is tight in Singapore.

IMAGE: Container ship with working crane bridge in shipyard in Singapore. Getty Images

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

• VLSFO prices up in Singapore ($25/mt) and Fujairah ($15/mt), and down in Zhoushan ($12/mt)
• LSMGO prices up in Singapore ($53/mt) and Fujairah ($37/mt), and down in Zhoushan ($22/mt)
• HSFO prices up in Fujairah ($16/mt) and Singapore ($10/mt), and down in Zhoushan ($12/mt)
• B30-VLSFO price up in Singapore ($27/mt)

Singapore’s LSMGO price has recorded the sharpest rise among the three major Asian bunker hubs. Despite the upward move, Singapore’s LSMGO is currently trading at discounts of $349/mt and $90/mt to Fujairah and Zhoushan are respectively.

Singapore’s VLSFO price has risen more sharply than its HSFO price, widening the port’s Hi5 spread from $112/mt to $127/mt.

At $127/mt, Singapore’s Hi5 spread remains below Fujairah’s $187/mt but above Zhoushan’s $89/mt.

Bunker fuel availability across all grades in Singapore is extremely tight. There are limited suppliers offering small HSFO parcels in Singapore, and a premium is expected for quantities of 500 mt and below.

Brent

The front-month ICE Brent contract has gained by $2.74/bbl on the day, to trade at $106.89/bbl, at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price has continued to move higher on the prospect of further escalation in the Middle East, with the Strait of Hormuz already shut by Iran and additionally subject to a US blockade.

US President Donald Trump told reporters that ceasefire with Tehran is on “life support,” the BBC reported. The news has raised fresh concerns in the oil market and pushed Brent’s price higher.

“The escalation in tensions raised concerns that oil supplies from Persian Gulf producers will remain curtailed for the foreseeable future,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Meanwhile, Iran’s speaker of parliament Mohammad Bagher Ghalibaf has warned the US of a “well-deserved” response to any further aggression.

“While there is a trickle of vessels transiting the strait, it is a fraction of the pre-conflict traffic,” Hynes added.

Downward pressure:

Trump is expected to meet Chinese President Xi Jinping during a state visit to Tiananmen Square in Beijing later this week. The news has put some downward pressure on Brent’s price.

“While optimism for an imminent deal is fading, there remains a glimmer of hope that talks between Trump and Chinese President Xi later this week could yield positive results on Iran,” two analysts from ING Bank said.

The visit is expected to include discussions aimed at providing greater clarity on the ongoing Middle East situation and laying the foundation for future cooperation.

“The hope is that China can use its influence over Iran to push it closer towards a peace deal,” ING Bank’s analysts said.

By Aparupa Mazumder

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