East of Suez Market Update 19 Aug

Prices in East of Suez ports have moved in mixed directions, and availability of all grades is tight in Fujairah.

IMAGE: Bunker barge at berth in Fujairah, UAE. Port of Fujairah

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

• VLSFO prices up in Zhoushan ($22/mt), and down in Fujairah ($12/mt) and Singapore ($10/mt)
• LSMGO prices up in Fujairah ($12/mt), Zhoushan ($8/mt), and down in Singapore ($15/mt)
• HSFO prices unchanged in Fujairah ($10/mt), and down in Singapore ($12/mt) and Zhoushan ($5/mt)

Fujairah and Singapore’s VLSFO prices have declined over the past day, while Zhoushan’s benchmark has surged. Fujairah’s VLSFO price is currently at discounts of $42/mt to Zhoushan and $8/mt to Singapore.

Renewed tensions between the US and Iran around the Strait of Hormuz continue to weigh on bunker fuel supply in Fujairah. VLSFO and LSMGO availability remains tight and broadly unchanged from last week, with only a limited number of suppliers able to offer LSMGO. HSFO supply also remains constrained.

Supply conditions are more comfortable at nearby Khor Fakkan, where VLSFO and HSFO remain readily available. Despite heightened regional tensions, bunker demand has increased at both Fujairah and Khor Fakkan, according to a Middle East-based source.

Brent

The front-month ICE Brent contract has gained by $0.98/bbl on the day, to trade at $91.90/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude has moved higher for a fourth consecutive session, as ongoing uncertainty surrounding the US-Iran standoff continues to put upward pressure on prices.

US President Donald Trump has signalled that talks with Iran have ended and that additional sanctions on Tehran could be announced later this week.

The potential implications of this move for shipping through the Strait of Hormuz could be adverse, according to market analysts.

“Oil prices extended gains… as uncertainty over a resolution to the US-Iran conflict continued to support risk premiums,” two analysts from ING Bank noted.

Downward pressure:

While there are no major downward pressures acting on Brent’s price today, market analysts continue to closely monitor the situation in the Middle East.

The 60-day peace accord that Trump signed on 17 June effectively ended earlier this week. However, Iran said the agreement is not dead but in a “coma”, its state-owned news agency IRNA reported.

Tehran’s comments suggest it could come back to the negotiation table if Washington agrees to its demands.

By Tuhin Roy and Aparupa Mazumder

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