East of Suez Market Update 2 Mar

Prices in East of Suez ports have surged, while availability of all grades is good in Zhoushan.

IMAGE: Aerial view of Zhoushan, Zhejiang, China. Getty Images

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

• VLSFO prices up in Zhoushan ($61/mt), Singapore and Fujairah ($60/mt)
• LSMGO prices up in Zhoushan, Fujairah ($80/mt) and Singapore ($73/mt)
• HSFO prices up in Singapore ($52/mt), Zhoushan ($43/mt) and Fujairah ($36/mt)
• B30-VLSFO prices up in Singapore and Fujairah ($86/mt)

VLSFO prices across the three major Asian bunker hubs have jumped over the weekend, tracking Brent’s rally following the latest escalation in the Middle East. Zhoushan's benchmark is now at premiums of $10/mt over Fujairah and $7/mt over Singapore.

US and Israeli strikes on Iran have sharply escalated regional tensions, but key Middle Eastern ports continue operating largely without disruption.

Meanwhile, bunker supply is good across all grades in Zhoushan, a source said. Availability of VLSFO and LSMGO remains good, with lead times steady at 3–5 days, unchanged from last week. HSFO supply has improved, with lead times narrowing from 5–7 days previously to 3–5 days now.

In Taiwan, a trader also reported “no significant impact” on availability. However, the Brent surge triggered by the Middle East escalation has “influenced” pricing considerably over the weekend.

Kaohsiung’s VLSFO price climbed by $45/mt over the weekend to $575/mt. Delivery lead times for VLSFO and LSMGO in Keelung and Hualien are about two days, while Kaohsiung and Taichung continue to recommend slightly longer lead times of around three days.

Brent

The front-month ICE Brent contract has surged by $7.91/bbl on the day from Friday, to trade at $79.09/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has risen by almost $8/bbl after US and Israeli forces launched a joint military attack on Iran, reportedly killing the Islamic Republic’s Supreme Leader Ayatollah Ali Khamenei.

Iran did not take long before launching a multitude of strikes, targeting US military bases as well as residential areas across several countries in the Middle East.

The move was largely expected by oil market analysts, as representatives from both sides failed to reach a breakthrough in earlier rounds of indirect nuclear talks in Geneva.

“The breakdown of talks leading to an escalation of the conflict has the biggest implications for the oil market,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

OPEC’s de-facto leader Saudi Arabia's state oil company Aramco halted its Ras Tanura refinery after it was hit by a drone earlier today, Reuters reported.

Meanwhile, Israel has launched fresh air strikes targeting Iran-backed Hezbollah militants in Lebanon – escalating tensions on the third day of cross-border strikes.

All eyes will likely remain on any new developments in the Strait of Hormuz, according to market analysts.

“With the retaliatory action now evolving to attacks on oil tankers in the Strait of Hormuz, the threat on oil supplies has substantially risen,” Hynes added.

Downward pressure:

While there are no significant downward pressures on Brent’s price today, market participants await the next US crude stocks report.

Last week, the US Energy Information Administration (EIA) reported a massive 16 million bbls increase in US crude stocks.

A rise in US crude stocks can indicate slow demand for oil and drag Brent's price lower.

Besides, eight members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have collectively agreed to increase oil output by 206,000 b/d in April.

The move could exert downward pressure on Brent, by fueling concerns over a potential supply glut.

By Tuhin Roy and Aparupa Mazumder

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