East of Suez Market Update 31 Aug

Bunker prices in East of Suez ports have moved in mixed directions, and availability of all grades is tight in Zhoushan.

IMAGE: An aerial view of Taichung Port. Taiwan Free Trade Zone 1

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

• VLSFO prices up in Fujairah ($5/mt), unchanged in Zhoushan, and down in Singapore ($1/mt)
• LSMGO prices up in Singapore ($11/mt), Fujairah ($6/mt) and Zhoushan ($1/mt)
• HSFO prices down in Fujairah ($15/mt), Singapore ($7/mt) and Zhoushan ($3/mt)
• B30-VLSFO price up in Singapore ($6/mt)

VLSFO prices across the three major Asian bunker ports have remained broadly rangebound over the weekend. Zhoushan’s VLSFO price is at a $10/mt premium to Singapore, while trading at a $24/mt discount to Fujairah.

Despite subdued bunker demand, VLSFO availability in Zhoushan remains tight. Suppliers are recommending lead times of around 10 days, compared with 7-10 days a week earlier. Lead times for LSMGO and HSFO have also lengthened to around 10 days, from 7-10 days previously.

The persistent supply tightness is largely a knock-on effect of the two-week suspension of bunkering operations following Typhoon Dolphin, which created significant delivery backlogs. Supply was further constrained after bunkering at Zhoushan’s inner and outer anchorages was suspended again last week due to rough weather associated with four successive tropical systems, according to a source.

Bunker deliveries resumed today at Zhoushan’s more sheltered Xiushandong and inner Mazhi anchorages after a six-day suspension caused by adverse weather from four successive tropical systems. However, most suppliers remain uncertain about when bunkering operations across Zhoushan will return to full capacity, the source added.

In Taiwan, VLSFO and LSMGO can be supplied in about two days at Hualien and in 2-3 days at Kaohsiung and Keelung, with lead times at all three ports almost unchanged from last week. Taichung requires slightly longer lead times of 3-4 days.

Brent

The front-month ICE Brent contract has gained by $1.70/bbl on the day from Friday, to trade at $91.24/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has opened the week ahead of the $90/bbl mark as Washington and Tehran target each other in a fresh round of airstrikes.

The US army has struck Iranian missile launchers on Iran’s Larak Island, amid threats that Iran was to launch mines into the Strait of Hormuz, Reuters reported.

Meanwhile, Tehran has retaliated by attacking US bases in Jordan and US military assets in the UAE, Al Jazeera reported.

This flare-up marks the first active fire exchange between Washington and Tehran since late July.

Oil prices gained after “the US carried out targeted strikes against Iran, drawing retaliatory strikes and reinforcing concerns about a prolonged stalemate in the Persian Gulf,” two analysts from ING Bank noted.

Downward pressure:

While there are no major downward pressures acting on Brent’s price today, the market will keep an eye out for any development in the formalisation of the Iran-Oman temporary navigational corridor through the Strait of Hormuz.

The development will support the restoration of some commercial navigation through the waterway that once carried one-fifth of global seaborne oil flows, market analysts said.

By Tuhin Roy and Aparupa Mazumder

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