East of Suez Market Update 3 Sep

Most benchmarks in East of Suez ports have moved higher, and availability of all grades remains tight in Zhoushan.

IMAGE: Night scene of Zhoushan, close to the dock on Putuo island. Getty Images

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

• VLSFO prices up in Singapore ($16/mt), Fujairah ($8/mt) and Zhoushan ($3/mt)
• LSMGO prices up in Singapore ($12/mt), Fujairah ($10/mt) and Zhoushan ($1/mt)
• HSFO prices up in Fujairah ($6/mt), Zhoushan ($5/mt), and unchanged in Singapore
• B30-VLSFO price up in Singapore ($8/mt)

VLSFO prices across the three major Asian bunker ports have increased by $3-16/mt over the past day. Zhoushan’s VLSFO price is currently at an $18/mt premium to Singapore, while remaining close to parity with Fujairah.

Despite subdued bunker demand, supply remains tight in Zhoushan. Suppliers are advising VLSFO lead times of around ten days, compared with 7-10 days a week earlier. LSMGO and HSFO lead times have also extended to around ten days, from 7-10 days previously.

The persistent supply constraints are largely a result of a two-week suspension of bunkering operations following Typhoon Dolphin in early August, which left suppliers with sizeable delivery backlogs. Availability came under further pressure last week when rough weather associated with four consecutive tropical systems forced another suspension of bunkering at Zhoushan’s inner and outer anchorages, a source said.

Bunkering resumed on Monday at the more sheltered Xiushandong and inner Mazhi anchorages after a six-day weather-related suspension. However, operations at Xiushandong were suspended again today after Typhoon Saudel made its third landfall in China, along the Fujian's coast. 

Suppliers remain uncertain about when bunkering activity across Zhoushan will return to full capacity, the source added.

Brent

The front-month ICE Brent contract has gained by $1.15/bbl on the day, to trade at $95.92/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has moved past the $95/bbl mark after renewed hostilities forced commercial vessels to continue avoiding the Strait of Hormuz.

Saudi Arabia’s Ministry of Foreign Affairs has accused Tehran of attacking the oil tanker Sidr, killing two sailors. The vessel is owned by Saudi Arabia’s national shipping company Bahri.

“Developments in recent days brought risks to regional oil supplies back into focus,” two analysts from ING Bank noted.

As of yesterday, nine vessels attempted to transit the strait, according to market intelligence provider Windward. Six vessels were operating with disabled AIS tracking transmitters.

“We’ve seen oil flow through the Strait of Hormuz despite the stalemate between the US and Iran, but rising tensions clearly put crossings at risk,” ING Bank’s analysts said.

Downward pressure:

While there are no major downward pressures on Brent’s price today, the market found some relief following positive remarks by US secretary of energy Chris Wright earlier this week.

‌Wright claimed ​that 17 ​million bbls of ⁠crude oil transited ​the Strait ​of Hormuz on Monday, marking the biggest uptick in flows ​via the narrow waterway in recent months, Reuters reported.

By Tuhin Roy and Aparupa Mazumder

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