East of Suez Market Update 29 July
Prices in East of Suez ports have risen, and availability is tight across all grades in Fujairah.
IMAGE: A container vessel in Oman's Sohar port. Asyad Group
Changes on the day to 17.00 SGT (09.00 GMT) today:
- VLSFO prices up in Fujairah ($29/mt), Singapore ($23/mt) and Zhoushan ($7/mt)
- LSMGO prices up in Fujairah ($43/mt), Singapore ($40/mt) and Zhoushan ($14/mt)
- HSFO prices up in Singapore ($17/mt), Zhoushan ($13/mt) and Fujairah ($9/mt)
- B30-VLSFO price up in Singapore ($21/mt)
Fujairah’s VLSFO price has climbed by $29/mt over the past day, marking the largest increase among the three major Asian bunker hubs. The port's VLSFO now commands a $15/mt premium over Singapore, while remaining at a $19/mt discount to Zhoushan.
Escalating US-Iran tensions in the Strait of Hormuz have tightened bunker fuel supply in Fujairah. Availability of both VLSFO and LSMGO has deteriorated from last week, when suppliers were still able to accommodate prompt deliveries. LSMGO is now being offered by only a limited number of suppliers, while HSFO remains in short supply and is generally available only on a firm enquiry basis.
The nearby port of Khor Fakkan continues to see healthier supply conditions, with good availability of both VLSFO and HSFO. Despite the stronger supply position, bunker demand has softened in both Fujairah and Khor Fakkan following the renewed regional conflict, a Middle East-based source said.
In Oman, LSMGO availability remains comfortable, with one supplier advising lead times of 2–3 days across the key ports of Duqm, Muscat, Sohar and Salalah.
Brent
The front-month ICE Brent contract has gained by $1.57/bbl on the day, to trade at $87.10/bbl at 17.00 SGT (09.00 GMT) today.
Upward pressure:
Brent’s price has moved higher on the back of renewed military action in the Middle East.
Iranian military has launched ballistic missiles targeting US bases in the Middle East, while US and Saudi Arabian forces carried out strikes on Iran-linked logistics and weapons sites across eastern Iraq.
The renewed combat has shattered the brief truce that had fuelled hopes of some cooling in the market, analysts said.
“These [latest] developments throw cold water on the idea of a swift de-escalation in the Persian Gulf,” two analysts from ING Bank noted.
Adding further upward pressure on Brent, the American Petroleum Institute (API) reported a surprise draw of 3.3 million bbls in US crude stocks in the week ended 24 July, Reuters reported.
A decline in US crude stocks indicates tightness in the oil market and support Brent's price rise.
Downward pressure:
Talks of de-escalation in the Middle East have capped some of Brent crude’s price rally today. Yesterday, US President Donald Trump said Washington and Tehran had engaged in talks and that there was a “good chance” of a lasting deal.
Brent crude’s price felt some downward pressure as “traders positioned for potential progress towards peace talks in the Middle East conflict,” ANZ Bank’s senior commodity strategist Daniel Hynes noted.
By Tuhin Roy and Aparupa Mazumder
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