East of Suez Market Update 16 Jan

Prices in East of Suez ports have moved in mixed directions, and LSMGO availability is good across several Japanese ports.

IMAGE: Mountain Fuji and the Keihin Industrial Zone near the Tokyo-Yokohama area, Japan. Getty Images

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

• VLSFO prices up in Singapore ($3/mt) and Zhoushan ($1/mt), and down in Fujairah ($5/mt)
• LSMGO prices up in Singapore ($1/mt), unchanged in Zhoushan and down in Fujairah ($20/mt)
• HSFO prices up in Fujairah ($5/mt) and Zhoushan ($1/mt), and unchanged in Singapore
• B30-VLSFO prices up in Fujairah ($3/mt) and Singapore ($2/mt)

VLSFO prices across the three major Asian bunker hubs have remained broadly rangebound over the past day. Singapore’s VLSFO price has shifted from near parity with Fujairah to a premium of $7/mt, while it stands at a discount of $11/mt to Zhoushan.

In Singapore, VLSFO availability has tightened significantly, with most suppliers now quoting lead times of 7–11 days, up sharply from 2–7 days last week.

Meanwhile, Fujairah’s LSMGO price has fallen sharply by $20/mt, while prices in the other two ports have remained broadly stable. Despite this steep decline, Fujairah’s LSMGO still trades at significant premiums of $115/mt and $83/mt over Singapore and Zhoushan, respectively. Most suppliers in Fujairah are recommending lead times of around 5–7 days for LSMGO.

In Japan, Tokyo continues to price its LSMGO at elevated levels relative to Fujairah, with a premium of $23/mt. LSMGO supply remains generally stable across several Japanese ports, including Tokyo, Chiba, Yokohama, Kawasaki, Osaka, Kobe, Sakai, Mizushima, Nagoya and Yokkaichi.

Brent

The front-month ICE Brent contract has declined by $0.43/bbl on the day, to trade at $64.08/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price this week has been driven primarily by heightened geopolitical risks and concerns over crude oil supply disruptions, market analysts said.

Kazakh oil shipments from the Caspian Pipeline Consortium (CPC) terminal are expected to come under “significant pressure” this month, according to two analysts from ING Bank.

Exports are expected to come in between 800,000 b/d – 900,000 b/d, or around 45% below initial expectations, Bloomberg reports.

“The drop is due to maintenance and damage caused by Ukrainian drones, while weather has also been an issue,” ING Bank’s analysts said.

Downward pressure:

Brent crude has faced downward pressure on easing fears of an imminent US intervention in Iran’s ongoing unrest.

Yesterday, US President Donald Trump told reporters that “killing in Iran is stopping”, adding that the US administration would be very upset if the Islamic Republic continued its crackdown on protestors.

“This reduced the likelihood of US intervention and possible disruptions to Iranian oil production and nearby shipping lanes,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Any escalation with Tehran will further raise concerns about potential disruptions to oil flows through the Strait of Hormuz, according to market analysts.

“The sell-off came as the US avoided taking immediate action against Iran amid ongoing protests in the country,” ING Bank’s analysts said.

By Tuhin Roy and Aparupa Mazumder

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