East of Suez Market Update 25 Sep

Most prices in East of Suez ports have declined, and availability of all grades remains severely constrained in Fujairah.

IMAGE: Fujairah Oil Tanker Terminals, which store and handle liquid bulk cargo in the port. Port of Fujairah

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

• VLSFO prices up in Zhoushan ($1/mt), and down in Fujairah ($64/mt) and Singapore ($24/mt)
• LSMGO prices down in Fujairah ($41/mt), Zhoushan ($33/mt) and Singapore ($32/mt)
• HSFO prices up in Zhoushan ($4/mt), and down in Fujairah ($24/mt) and Singapore ($13/mt)
• B30-VLSFO price down in Singapore ($9/mt)

Fujairah's VLSFO price has dropped by $64/mt, the steepest decline among the three major bunker ports. The benchmark now stands at a $98/mt premium over Singapore and a $21/mt premium over Zhoushan. The fall is also the Gulf port's sharpest single-day VLSFO drop since early July, going by ENGINE's daily average data.

The price drop has done little to ease conditions on the ground in Fujairah, where bunker supply remains severely constrained because US-Iran tensions continue to disrupt shipping through the Strait of Hormuz. All major fuel grades are said to be in very short supply, and fuel oil imports into the port have fallen sharply amid heightened uncertainty in the region.

Nearby Khor Fakkan is facing similar pressure, with availability of all grades still limited, according to a Middle East-based source.

In Oman, bunker prices have risen significantly as the conflict drags on, but operations remain unaffected so far, with supply continuing as normal and no major challenges reported, a trader said. LSMGO supply is holding steady at key Omani ports, including Salalah, Muscat, Duqm and Sohar, where suppliers advise lead times of around one day.

Brent

The front-month ICE Brent contract has declined by $1.08/bbl on the day, to trade at $104.69/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price is poised to end the week higher than it began, as commercial vessels continue to come under incessant air assaults.

Another incident was reported within the Strait of Hormuz on Wednesday, according to the United Kingdom Maritime Trade Operations (UKMTO) agency.

The cargo vessel was hit by an unknown projectile, the UKMTO reported. The vessel is currently on fire and adrift.

“All crew have been evacuated with two casualties reported,” the agency said.

As of yesterday, only 12 vessels attempted to transit the Strait of Hormuz - 10 inbound, two outbound, market intelligence provider Windward reported.

Although this number was one more than the 11 transits recorded on 23 September, vessel traffic remains well below the pre-war average of 140 daily transits.

The slump in maritime traffic in the region stems from drone and missile attacks, and also the compounding impact of the US naval blockade of Iranian ports.

So far, the US Central Command (CENTCOM) has redirected 115 commercial vessels, disabled more than three, and boarded two, to prevent ships from entering or departing Iranian ports, it said earlier.

Downward pressure:

Brent crude’s price has moved lower amid hopes of a diplomatic breakthrough between the US and Iran.

Negotiators from both countries are exploring a phased way out of the conflict, which is now in its sixth month.

As part of the agreement, Tehran will reopen the Strait of Hormuz and Washington is to lift its economic sanctions and release frozen Iranian assets, Reuters reported citing sources.

“We have introduced a plan to the United States through the mediators that if certain conditions are met... the strait will be open in seven days,” Financial Times cited Iranian foreign minister Abbas Araghchi as saying on the sidelines of the United Nations General Assembly meeting in New York.

The Strait of Hormuz has emerged as the core bargaining chip in negotiations to resolve the Middle East conflict – Tehran is pressing to dismantle the US blockade that is strangling its economy, while Washington is demanding the reopening of the narrow waterway currently blocked by Iranian forces.

By Tuhin Roy and Aparupa Mazumder

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