East of Suez Market Update 20 July

Most bunker prices across East of Suez ports have moved higher, and VLSFO availability is tight 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 ($35/mt), Fujairah ($10/mt) and Singapore ($9/mt)
• LSMGO prices up in Zhoushan ($56/mt), Singapore ($31/mt), and down in Fujairah ($5/mt)
• HSFO prices up in Zhoushan ($38/mt), Singapore ($14/mt), and down in Fujairah ($16/mt)

Zhoushan's VLSFO price has climbed by $35/mt over the weekend, marking the sharpest increase among the three major Asian bunker hubs. The port's VLSFO benchmark is now at a $30/mt premium to Singapore and a $21/mt discount to Fujairah.

Despite softer demand, VLSFO supply in Zhoushan has tightened, with recommended lead times extending to around 12 days, up from about eight days previously. A source attributed the longer waiting times to limited supply from refineries.

Lead times for both LSMGO and HSFO have also increased to around seven days, compared with about five days last week.

Meanwhile, bunkering operations at Zhoushan's outer Tiaozhoumen and Xiazhimen anchorages have remained suspended since 7 July due to adverse weather conditions. Most suppliers are still uncertain about when normal bunker operations across the port will fully resume, the source added.

In Taiwan, state-owned bunker supplier CPC Corporation (CPC) has temporarily suspended the acceptance of new LSMGO nominations for deliveries at Kaohsiung because of a tight barge schedule.

According to a source, LSMGO deliveries have been suspended since last Friday and will remain on hold until CPC clears its backlog of pending orders.

The disruption has also affected VLSFO supply at Kaohsiung, with recommended lead times increasing to 4-5 days from around three days last week.

Elsewhere in Taiwan, bunker supply remains stable. Recommended lead times for both VLSFO and LSMGO are around two days at Hualien, while Keelung and Taichung continue to record lead times of about three days, broadly unchanged from the previous week.

Brent

The front-month ICE Brent contract has gained by $3.11/bbl on the day from Friday, to trade at $88.22/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has continued to move higher this week as the US and Iran continue to exchange strikes – proving to be “deadly” for both sides, according to market analysts.

More commercial tankers came under attack while transiting the Strait of Hormuz over the weekend, the United Kingdom Maritime Trade Operations (UKMTO) reported.

At least two vessels were hit by unknown projectiles - causing fire and structural damages, the UKMTO reported.

Only two outbound visible oil tankers transited the Strait of Hormuz yesterday, two analysts from ING Bank said, citing LSEG data.

“[Oil] flows are essentially back to where they were before the [US-Iran] Memorandum of Understanding (MoU),” ING Bank’s analysts said.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US increased by seven over the week, to 452 units last week.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

By Tuhin Roy and Aparupa Mazumder

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