Europe & Africa Market Update 10 July

Regional bunker price benchmarks have mostly remained steady, while vessels calling at Gibraltar face long queues.

IMAGE: Aerial view of the Bay of Gibraltar. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Durban ($7/mt), Rotterdam ($5/mt) and Gibraltar ($2/mt)
• LSMGO prices up in Gibraltar ($14/mt) and Rotterdam ($3/mt), and down in Durban ($33/mt)
• HSFO prices up in Gibraltar ($8/mt), and down in Durban ($27/mt) and Rotterdam ($3/mt)
• B30-VLSFO prices up in Gibraltar ($1/mt), and down in Rotterdam ($2/mt)

Most bunker benchmarks in Rotterdam and Gibraltar have remined steady over the past day.

Meanwhile, Gibraltar’s LSMGO price has gained sharply over the past session. Two stems fixed at high prices of $1,091-1,103/mt have provided support to the benchmark.

Rotterdam’s comparatively modest LSMGO price gain has widened Gibraltar’s premium over the Dutch port by $11/mt to $103/mt in the past session.

Gibraltar's HSFO price has also seen a considerable gain. A large HSFO stem of between 500-1,500 mt fixed at a high price of $501/mt has provided support to the HSFO benchmark.

Fuel availability is tight in Gibraltar Strait ports for prompt delivery dates, and buyers are advised lead time of around seven days to avoid high price premiums, a trader said.

Ships visiting Gibraltar for bunkers were seeing heavy congestion on Friday morning, with around 22 vessels waiting at the port for bunkers due to lack of space for vessels, port agent MH Bland said. Some suppliers are delayed by anywhere between 12-24 hours depending on when space is available, the port agent said.

The congestion is mainly due to overbooking by suppliers, a source told ENGINE.

Brent

The front-month ICE Brent contract has fallen by $1.34/bbl on the day, to trade at $76.20/bbl at 09.00 GMT.

Upward pressure:

Oil prices have gained upward support as renewed fighting between the US and Iran has revived concerns over potential supply disruptions from the Middle East following a slowdown in shipping through the Strait of Hormuz.

Iranian armed forces launched attacks on US military infrastructure in Gulf states on Thursday in response to US strikes on Iran's southern coastal and eastern provinces, further straining a three-week-old ceasefire. Separately, Iranian media reported multiple explosions across southern Iran, including in Bushehr, home to one of the country's nuclear power plants, Reuters reported.

The renewed hostilities have delayed the full reopening of the Strait of Hormuz.

“The latest escalation in US-Iran military tensions this week raises new risks,” ING Bank commodity strategist Warren Patterson said.

Downward pressure:

Despite the renewed tensions, expectations that the US and Iran could return to diplomatic negotiations have weighed on market sentiment.

"Despite the US ramping up attacks on military sites in Iran, the market drew some reassurance from the Trump administration’s decision to avoid targeting Iranian energy infrastructure,” ANZ Bank senior commodity strategist Daniel Hynes said.

“US said to continue ‘technical talks’ with Iran despite trading air strikes,” Vanda Insights founder Vandana Hari commented.

The US Energy Information Administration (EIA) reported a 3-million-bbl increase in commercial crude oil inventories to 411.4 million bbls in the week ending 3 July.

Brent futures came under further downward pressure after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to raise oil production again in August. Seven members of the producer group will implement a combined production adjustment of 188,000 b/d next month.

By Nachiket Tekawade and Tuhin Roy

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