East of Suez Market Update 4 Sep

Prices in East of Suez ports have declined, and VLSFO availability is tight in Fujairah.

IMAGE: View of the cargo port in Jeddah. Getty Images

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

• VLSFO prices down in Zhoushan ($28/mt), Fujairah ($10/mt) and Singapore ($9/mt)
• LSMGO prices down in Zhoushan ($27/mt), Fujairah ($15/mt) and Singapore ($9/mt)
• HSFO prices down in Fujairah ($15/mt), Zhoushan ($14/mt) and Singapore ($9/mt)
• B30-VLSFO price down in Singapore ($6/mt)

VLSFO prices across the three major Asian bunker ports have declined by $9-28/mt over the past day. Despite the drop, Fujairah’s VLSFO price remains at premiums of $20/mt and $19/mt over Zhoushan and Singapore, respectively.

US-Iran tensions over the Strait of Hormuz continue to weigh on bunker fuel availability in Fujairah. VLSFO and LSMGO supply remains tight and broadly unchanged from last week, with only a limited number of suppliers able to offer LSMGO. HSFO availability also remains restricted.

In Saudi Arabia, VLSFO and LSMGO availability in Jeddah remains steady despite firm demand. At Qatar’s Ras Laffan, bunker supply continues to be constrained, with both VLSFO and LSMGO in limited availability.

Brent

The front-month ICE Brent contract has slumped by $0.80/bbl on the day, to trade at $95.12/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price is poised to end the week higher than it began, amid escalating hostilities between the US and Iran in the Middle East.

Renewed drone strikes have driven commercial fleets to detour around the Strait of Hormuz, increasing voyage times.

Earlier this week, multiple unmanned aerial vehicles (UAVs) struck two commercial vessels attempting to transit the region – one belonging to Saudi Arabia’s national shipping company Bahri, and another sailing under a South Korean flag.

Riyadh’s Ministry of Foreign Affairs has accused Tehran of the attack on oil tanker Sidr, which killed two sailors.

“Oil prices remain elevated, with ICE Brent holding above $95/bbl, amid a pickup in hostilities between the US and Iran this week,” two analysts from ING Bank noted.

Downward pressure:

Crude oil exports from Iraq have increased to about 2.34 million b/d in August, from 1.35 million bp/d in July, Reuters reported, citing two Iraqi energy officials. The news has put some downward pressure on Brent.

Brent crude’s price rally “may lose traction if Hormuz shipments keep moving smoothly,” ING Bank’s analysts said.

Any uptick in the number of vessels transiting the Strait of Hormuz is expected to slash oil prices, according to market analysts.

“If Strait of Hormuz flows continue uninterrupted despite the latest escalation, the upward pressure on prices may begin to fade,” ING Bank’s analysts said.

By Tuhin Roy and Aparupa Mazumder

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