East of Suez Market Update 3 Nov
Most prices in East of Suez ports have moved higher, and VLSFO availability has improved in Fujairah.
IMAGE: Port of Salalah in Oman during the twilight hours. Getty Images
Changes on the day to 17.00 SGT (09.00 GMT) today:
- VLSFO prices up in Fujairah ($21/mt) and Zhoushan ($20/mt), and down in Singapore ($24/mt)
- LSMGO prices up in Zhoushan ($59/mt) and Singapore ($17/mt), and down in Fujairah ($23/mt)
- HSFO prices up in Singapore ($12/mt), Fujairah and Zhoushan ($6/mt)
- B30-VLSFO down in Singapore ($23/mt)
Although HSFO and VLSFO have recorded gains at Fujairah, the port's LSMGO price has recorded a $23/mt decline over the past session.
On the other hand, LSMGO has recorded increases at Zhoushan and Singapore, in line with the general market trend.
Despite the price dip, the grade at the UAE port continues to trade at a $425/mt premium to Singapore and a $332/mt premium to Zhoushan.
Fujairah’s LSMGO monthly average reached $1,716/mt in October, the highest since November 2021.
Fujairah’s Hi5 spread has widened from $219/mt to $234/mt, moving above Zhoushan’s spread of $108/mt and Singapore’s $83/mt.
VLSFO availability in Fujairah has improved even though vessel traffic through the Strait of Hormuz remains disrupted amid US-Iran tensions, a regional source said. However, supplies of LSMGO and HSFO remain limited.
Omani ports have seen steady activity, with demand and supply largely unchanged from the previous month. Vessel activity is particularly high at Duqm, which may affect scheduling.
LSMGO can generally be arranged within 2-3 days in Omani ports including Salalah, Sohar, Duqm and Muscat, depending on the port, the quantity required and terminal approvals, an Oman-based trader said.
Brent
The front-month ICE Brent contract has decreased by $2.46/bbl on the day, to trade at $106.42/bbl at 17.00 SGT (09.00 GMT) today.
Upward pressure:
Brent has received support from escalating geopolitical tensions, following reports of a US strike on Iran's Qeshm Island. Citing a US official, Reuters reported that Washington carried out the strike on Monday.
Meanwhile, prospects for a diplomatic resolution remain uncertain. A senior Iranian official told Reuters that Tehran and Washington were still far from reaching an agreement to end the war, adding that Iran would not accept Washington's excessive demands.
The lack of progress in negotiations and continued uncertainty over the reopening of the Strait of Hormuz have further supported oil prices.
“The oil market is also wary of stop-and-go diplomatic efforts that haven’t delivered peace, with the two adversaries yet to agree on terms for fully reopening the Strait of Hormuz,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
Supply-side concerns have also contributed to the upward pressure. An oil refinery in Russia's Yaroslavl city was damaged in a Ukrainian drone attack, local governor Mikhail Evrayev said on Tuesday. Russia's Defence Ministry separately reported that it had intercepted 856 Ukrainian drones over the country's regions overnight, Reuters reported.
Downward pressure:
However, market hopes of progress in diplomatic efforts to end the US-Israeli war with Iran have weighed on Brent prices, with the prospect of a resolution raising expectations of a gradual stabilisation in Middle Eastern crude supplies.
Talks between Iranian and Qatari officials have fuelled optimism about a possible end to the conflict and the restoration of regional supply stability, Reuters reported.
“Crude oil slumped as the US and Iran explored a diplomatic solution to the eight-month conflict,” Hynes said.
The possibility of further price declines remains closely tied to developments in peace negotiations. “What is clear, though, is that strong signals of progress in peace talks would mean more downside for prices,” two analysts from ING Bank noted.
By Tuhin Roy
Please get in touch with comments or additional info to news@engine.online
