East of Suez Market Update 7 July

Prices in East of Suez ports have moved in mixed directions, and availability of all grades has tightened 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:

• VLSFO prices up in Fujairah ($8/mt), and down in Zhoushan ($46/mt) and Singapore ($35/mt)
• LSMGO prices up in Fujairah ($4/mt), and down in Zhoushan ($18/mt) and Singapore ($3/mt)
• HSFO prices up in Singapore, Zhoushan ($12/mt) and Fujairah ($7/mt)
• B30-VLSFO price up in Singapore ($15/mt)

Zhoushan’s VLSFO price has dropped by $46/mt, marking a steeper decline than in Singapore, while Fujairah’s VLSFO price has edged higher. As a result, Zhoushan’s VLSFO premium over Fujairah has flipped to a marginal discount of $3/mt, while its premium over Singapore has narrowed to $20/mt.

The port’s HSFO price, meanwhile, has risen by $12/mt, shrinking Zhoushan’s Hi5 spread to $177/mt from $235/mt. Despite the contraction, the spread remains wider than in Singapore ($169/mt) and Fujairah ($155/mt).

Bunker availability in Zhoushan has tightened despite subdued demand. Recommended lead times for VLSFO have extended from 7–12 days last week to 10–15 days, while lead times for both LSMGO and HSFO have increased from 5–7 days to 7–10 days.

Bunker deliveries at Zhoushan’s outer and inner anchorages have been suspended since this morning due to adverse weather brought by Super Typhoon Bavi, a source said.

At Taiwan’s major ports of Hualien, Keelung, Taichung and Kaohsiung, bunker fuel availability remains stable. Recommended lead times for VLSFO and LSMGO are around two days in Hualien and Taichung, while deliveries in Keelung and Kaohsiung require approximately three days. These lead times are largely unchanged from the previous week.

Brent

The front-month ICE Brent contract has gained by $1.33/bbl on the day, to trade at $72.95/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price has moved higher after commercial ships transiting the Strait of Hormuz came under attack once again.

An LNG carrier, Al Rekayyat, was hit by an unknown projectile on the port side causing a fire earlier today, the United Kingdom Maritime Trade Operations (UKMTO) reported. The vessel was laden with LNG when it came under attack.

Moreover, Iran's Islamic Revolutionary Guard Corp (IRGC) has launched at least two missiles at commercial ships transiting through the Strait of Hormuz via the Omani corridor yesterday.

The initial rebound in vessel transits through the region after the US-Iran temporary peace accord “has stalled”, ANZ Bank’s senior commodity strategist Daniel Hynes said, adding that vessel crossings remain “in single digits and no sustained recovery [is] evident”.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US increased by five over the week, to 445 units last week.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening, or expected to happen, in the shale sector.

By Tuhin Roy and Aparupa Mazumder

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