East of Suez Market Update 23 Sep

Most prices in East of Suez ports have moved higher, and supply of all major grades remains severely strained 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 Fujairah ($14/mt), Zhoushan ($12/mt) and Singapore ($6/mt)
• LSMGO prices up in Fujairah ($47/mt), Zhoushan ($4/mt), and down in Singapore ($15/mt)
• HSFO prices up in Zhoushan ($39/mt), Fujairah ($22/mt) and Singapore ($7/mt)

Fujairah's VLSFO price has gained $14/mt, the largest increase among the three major Asian bunker ports. The price now stands at a $134/mt premium over Singapore and an $88/mt premium over Zhoushan.

Fujairah's HSFO price has risen more steeply than its VLSFO, narrowing the port's Hi5 spread from $293/mt to $285/mt. The spread remains well above Singapore's $157/mt and Zhoushan's $134/mt.

Fujairah's LSMGO price has jumped by $47/mt, the sharpest move of any grade across the three ports. The benchmark now stands close to its highest level since early April.

Bunker supply in Fujairah remains under severe pressure as persistent US-Iran tensions continue to disrupt vessel traffic through the Strait of Hormuz. Availability of all major fuel grades is described as “super tight,” because fuel oil imports into the port have dropped steeply amid mounting uncertainty in the region.

Neighbouring Khor Fakkan is facing similar strain, with a Middle East-based source saying supplies of all grades remain limited there.

Brent

The front-month ICE Brent contract has gained by $0.10/bbl on the day, to trade at $99.43/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude has felt some upward pressure, as more commercial vessels came under air assaults this week.

An LPG tanker, attempting an outbound transit of the Strait of Hormuz, was hit by debris from unknown projectiles on Monday, the United Kingdom Maritime Trade Operations (UKMTO) agency reported.

A separate vessel, conducting an inbound transit into the strait, was struck by an unknown projectile, the UKMTO reported.

As of yesterday, only 12 vessels attempted to transit the Strait of Hormuz, market intelligence provider Windward reported. Of this, six vessels moved in dark mode, the data also showed.

Downward pressure:

Brent crude’s price has felt downward pressure amid growing market expectations of a diplomatic breakthrough in US-Iran negotiations and increased crude oil exports from Saudi Arabia.

US President Donald Trump told reporters that US officials ‌had a “very good” three-hour meeting with Iranian representatives, at the ongoing United Nations General Assembly summit in New York earlier today.

“The first signs of diplomatic traction between the US and Iran can take enough heat out of energy prices,” SPI Asset Management managing partner Stephen Innes noted.

Additionally, Saudi Arabia has restarted operations at its 1,200 km East-West pipeline and could soon resume exports from the Red Sea terminal of Yanbu, Reuters reported citing sources.

These developments have “helped ease concerns over Middle East supply disruptions,” two analysts from ING Bank noted.

By Tuhin Roy and Aparupa Mazumder

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