East of Suez Market Update 6 Oct

Prices in East of Suez ports have fallen, and availability of all grades is severely restricted in Fujairah.

IMAGE: Harbour craft in front of an oil tanker in Fujairah. Port of Fujairah

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

• VLSFO prices down in Zhoushan ($55/mt), Fujairah and Singapore ($29/mt)
• LSMGO prices down in Zhoushan ($152/mt), Fujairah ($96/mt) and Singapore ($50/mt)
• HSFO prices down in Zhoushan ($46/mt), Singapore ($24/mt) and Fujairah ($8/mt)

Fujairah's VLSFO price has fallen by $29/mt to $942/mt, matching Singapore's decline and falling short of Zhoushan's $55/mt drop. Fujairah's benchmark stands at an $82/mt premium over Singapore, unchanged on the day, and a $58/mt premium over Zhoushan, up from $32/mt.

Fujairah's Hi5 spread has narrowed from $283/mt to $262/mt but remains well above Singapore's $112/mt and Zhoushan's $45/mt.

Bunker supply in Fujairah remains severely restricted as US-Iran tensions continue to disrupt vessel traffic through the Strait of Hormuz, according to a regional source. Availability of all major grades is extremely limited as fuel oil arrivals have fallen sharply amid heightened uncertainty across the region.

Similar supply pressure is being reported at nearby Khor Fakkan, where availability of all grades remains tight.

Brent

The front-month ICE Brent contract has lost by $3.55/bbl on the day, to trade at $99.00/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has remained well-supported this week, as geopolitical risks are locked in a tense equilibrium against some improvement in the supply fundamentals.

Tensions have escalated between Riyadh and Yemen’s Iran-aligned Houthis after the militant group struck Saudi state-owned oil company Aramco’s refinery in Rabigh, causing a fire at the facility.

The group has also warned all international airlines using Saudi airspace to cease operations, calling it an active war zone, following attacks on the King Khalid International Airport and the Abha Airport.

“While there are growing signs of a recovery in oil flows from the Persian Gulf, the market remains nervous about potential supply disruptions from the region,” two analysts from ING Bank said.

Downward pressure:

Brent crude’s price has shed yesterday's gains after the Group of Seven (G7) countries' announcement of the release of emergency oil stocks.

The G7 and their partners have agreed to collectively release up to 100 million bbls of emergency crude oil stocks over the next four months, in coordination with the International Energy Agency (IEA).

Crude oil production across the Persian Gulf has also shown signs of improvement as regional operators adapt to the continuously evolving geopolitical landscape.

Kuwait said that it is producing at 75% of pre-war levels, ING Bank’s analysts noted, adding that “the Saudis also cut the official selling price of their Arab Light into Asia for November loadings, a sign of an improving supply picture.”

By Tuhin Roy and Aparupa Mazumder

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