Europe & Africa Market Update 12 May

Prices of most conventional fuels across European and African ports have moved higher, and prompt bunker supplies are tight at the Gibraltar Strait ports.

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

Changes on the day from 09.00 GMT today:

• VLSFO prices up in Durban ($34/mt), Rotterdam ($28/mt) and Gibraltar ($12/mt)
• LSMGO prices up in Durban ($468/mt) and Rotterdam ($60/mt), and down in Gibraltar ($4/mt)
• HSFO prices up in Durban ($44/mt), Rotterdam ($41/mt) and Gibraltar ($21/mt)
• B30-VLSFO prices up in Rotterdam ($21/mt) and Gibraltar ($15/mt)

Bunker benchmarks have mostly recorded gains over the past day, tracking the rise in Brent's price.

Meanwhile, Gibraltar’s LSMGO price has dipped slightly over the past day. Additionally, nearby Algeciras' LSMGO price has also dropped, although more significantly. This has widened the Spanish port's price discount to $45/mt today, from $18/mt yesterday.

Algeciras’ VLSFO price has also dropped around $33/mt over the past session, narrowing the port’s price premium over Gibraltar from $48/mt yesterday, to $3/mt today.

Securing supplies of all fuel grades is tight in the Gibraltar strait, and buyers are advised to enquire about stems around 7-10 days in advance, a trader told ENGINE.

Some suppliers are delayed by around 12 hours at the port of Gibraltar, according to port agent MH Bland.

Brent

The front-month ICE Brent contract has gained by $2.74/bbl on the day, to trade at $106.89/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has continued to move higher on the prospect of further escalation in the Middle East, with the Strait of Hormuz already shut by Iran and additionally subject to a US blockade.

US President Donald Trump told reporters that ceasefire with Tehran is on “life support,” the BBC reported. The news has raised fresh concerns in the oil market and pushed Brent’s price higher.

“The escalation in tensions raised concerns that oil supplies from Persian Gulf producers will remain curtailed for the foreseeable future,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Meanwhile, Iran’s speaker of parliament Mohammad Bagher Ghalibaf has warned the US of a “well-deserved” response to any further aggression.

“While there is a trickle of vessels transiting the strait, it is a fraction of the pre-conflict traffic,” Hynes added.

Downward pressure:

Trump is expected to meet Chinese President Xi Jinping during a state visit to Tiananmen Square in Beijing later this week. The news has put some downward pressure on Brent’s price.

“While optimism for an imminent deal is fading, there remains a glimmer of hope that talks between Trump and Chinese President Xi later this week could yield positive results on Iran,” two analysts from ING Bank said.

The visit is expected to include discussions aimed at providing greater clarity on the ongoing Middle East situation and laying the foundation for future cooperation.

“The hope is that China can use its influence over Iran to push it closer towards a peace deal,” ING Bank’s analysts said.

By Nachiket Tekawade, Samantha Shaji and Aparupa Mazumder

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