Europe & Africa Market Update 16 Sep

Bunker prices in European and African ports have mostly gained, while prompt fuel supply is tight in the ARA hub.

IMAGE: The Europort area in the Port of Rotterdam. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($8/mt), Gibraltar ($3/mt), and down in Rotterdam ($27/mt)
• LSMGO prices up in Gibraltar ($19/mt), Rotterdam ($9/mt) and Durban ($8/mt)
• HSFO prices up in Rotterdam ($6/mt), Gibraltar ($3/mt) and Durban ($2/mt)
• B30-VLSFO prices up in Gibraltar ($1/mt), and down in Rotterdam ($39/mt)

Most regional bunker benchmarks have gained in the past day. Meanwhile, Rotterdam’s VLSFO price has dropped sharply, possibly pressured by a large 500-1,500 mt stem fixed at a low price of $697/mt in the Dutch port.

Gibraltar’s VLSFO price has edged higher. Consequently, Rotterdam’s VLSFO price discount to Gibraltar has widened by $30/mt in a single day.

The steep fall in Rotterdam’s VLSFO price has also dragged its B30-VLSFO price sharply lower, widening its discount to Gibraltar’s blend by $40/mt in a single session.

Fuel availability is tight in the ARA hub for prompt delivery dates, with buyers recommending lead times of 5-7 days to get good coverage from suppliers, a trader told ENGINE.

Brent

The front-month ICE Brent contract has inched $0.01/bbl lower on the day, to trade at $107.90/bbl at 09.00 GMT.

Upward pressure:

Brent crude's price has continued to trade close to $110/bbl as Middle East supply concerns rattle the global oil market.

Washington has claimed that Tehran is willing to resort to diplomacy, while Iranian officials have dismissed such theories.

Moreover, oil prices have surged after the Iran-backed Houthis hit the 1,200 km East-West Pipeline, disrupting Riyadh's critical export route, which funnels about 70% of its crude exports through the Red Sea terminal at Yanbu to circumvent the Strait of Hormuz.

The attack "has significantly curtailed the OPEC producer's ability to export oil," ANZ Bank's senior commodity strategist Daniel Hynes said.

The pipeline shutdown could last for weeks and crude oil at Yanbu may deplete before the pipeline operations fully restore, market analysts said.

"The Houthi group also seized a strategic port and island directly on the Bab al-Mandeb Strait at the south end of the Red Sea," Hynes added.

Downward pressure:

Brent's price has felt some downward pressure after the American Petroleum Institute (API) reported a huge rise in US crude stocks.

US crude oil inventories increased by 7.14 million bbls in the week ending 11 September, the API reported.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

By Nachiket Tekawade and Aparupa Mazumder

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