East of Suez Market Update 16 June

Most prices in East of Suez ports have moved down, and availability of all grades is tight across several UAE ports.

IMAGE: Large cargo ships docked to load and unload goods at Khor Fakkan port, UAE. Getty Images

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

• VLSFO prices up in Fujairah ($35/mt), and down in Zhoushan ($31/mt) and Singapore ($19/mt)
• LSMGO prices up in Fujairah ($43/mt), and down in Singapore ($88/mt) and Zhoushan ($36/mt)
• HSFO prices up in Fujairah ($20/mt), and down in Singapore ($56/mt) and Zhoushan ($14/mt)

Fujairah has recorded a sharp increase in its VLSFO price, which rose by $35/mt over the past day, in contrast to declining prices in Zhoushan and Singapore. Fujairah’s VLSFO remains at substantial premiums of $568/mt over Zhoushan and $566/mt over Singapore.

The upward price movement has been driven by increasingly tight VLSFO availability at the port. Bunker fuel supply has become significantly constrained in both Fujairah and Khor Fakkan, with only a limited number of suppliers currently able to offer fuel. Many suppliers are responding to requests selectively and issuing quotations only against firm enquiries, according to a market trader.

Availability of VLSFO and LSMGO is particularly restricted in Fujairah, where only a handful of suppliers still hold stocks. HSFO supply is comparatively less strained, although only two suppliers are currently able to provide the grade.

Supply conditions in Khor Fakkan are similarly tight across all bunker fuel grades, with suppliers assessing enquiries on a case-by-case basis before submitting offers.

The supply crunch is largely attributed to a shortage of inbound cargoes, leaving bunker barges without enough product to replenish inventories. Although replenishment cargoes were expected to arrive during the past two weeks, there is still no confirmed timeline for their arrival, the trader noted.

Barges that had previously loaded fuel continue to supply the market until their inventories are exhausted, but a significant share of these volumes has already been sold. Suppliers have warned that both Fujairah and Khor Fakkan could effectively run out of bunker fuel within the coming days if the anticipated cargoes fail to arrive and the remaining barge stocks become fully committed.

The trader further indicated that even if fresh cargoes reach the ports, bunker fuel prices are expected to remain at elevated premium levels.

Meanwhile, bunker availability in Dubai is also facing mounting pressure, with suppliers largely restricting offers to firm enquiries rather than providing open quotations.

Brent

The front-month ICE Brent contract has declined by $1.6/bbl on the day, to trade at $81.22/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Market participants are still analysing the viability of the US-Iran peace deal.

Brent futures has gained some support amid concerns that the resumption of normal shipping traffic through the Strait of Hormuz, and a recovery in oil supplies, will not be immediate.

“This is an important juncture in the Middle East conflict. However, any recovery of oil supplies will likely take months. Shipping companies will need assurances that the key waterway is free of mines before they resume transits on a large scale,” ANZ Bank’s senior market strategist Daniel Hynes said.

Crude oil inventories in the US Strategic Petroleum Reserve have fallen to around 340 million bbls, their lowest level since 1983. Stocks have fallen sharply following continued drawdowns under the US commitment to supply 172 million bbls to the International Energy Agency’s (IEA) coordinated effort to stabilise global oil supplies amid the Middle East conflict, two analysts from ING Bank said.

Downward pressure:

Brent crude’s price has declined amid growing optimism over the reopening of the Strait of Hormuz after US President Donald Trump announced a preliminary peace deal with Iran.

Iran’s Foreign Minister Abbas Araqchi said on Tuesday that the two sides would discuss the details of the agreement in Switzerland on Friday to reach a final deal, Reuters reported.

“Crude oil prices slumped after the US and Iran announced they had reached a deal to end the Middle East conflict. The two sides are set to sign the memorandum of understanding in Switzerland on Friday,” Hynes said.

The final text of the agreement is expected to be released in the coming days.

By Tuhin Roy and Shilpa Sharma

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