Europe & Africa Market Update 17 June

Bunker prices across major European and African ports have declined, while fuel demand and availability remain normal in Istanbul.

IMAGE: Aerial view of container port and ship in Istanbul Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Gibraltar ($14/mt), Rotterdam ($13/mt) and Durban ($7/mt)
• LSMGO prices down in Gibraltar ($27/mt) and Rotterdam ($26/mt)
• HSFO prices down in Rotterdam ($31/mt) and Gibraltar ($4/mt)
• B30-VLSFO prices down in Gibraltar ($20/mt) and Rotterdam ($18/mt)

Regional bunker benchmarks have recorded significant declines, tracking Brent’s fall.

Istanbul’s LSMGO price has dropped by $44/mt over the past session, more sharply than Gibraltar’s LSMGO. Two lower-priced stems of less than 50 mt, fixed between $1,006-1035/mt, have put downward pressure on the benchmark.

This decline in price has narrowed Istanbul’s price premium over Gibraltar by around $17/mt, and the grade's prices at both ports are now almost at parity.

Istanbul’s LSMGO is currently trading at a discount of a $115/mt to Piraeus' LSMGO and a $50/mt discount to the grade offered off Malta.

Fuel demand is good in Istanbul and availability is stable, with 1-3 days of notice advised for all fuel grades, a local supplier told ENGINE.

Brent

The front-month ICE Brent contract has declined by $2.01/bbl on the day, to trade at $79.21/bbl at 09.00 GMT.

Upward pressure:

Market participants continue to assess the implications of the recent US-Iran peace deal, with uncertainty surrounding its implementation shaping sentiment in the global oil market.

Concerns over the full restoration of shipping through the Strait of Hormuz have lent some support to Brent crude futures.

“Nevertheless, many questions remain as to how the interim US-Iran deal will be implemented. Concerns over the safety of vessels remains high, while there is some doubt as to whether the chokepoint for a fifth of the world’s supply will remain toll-free,” ANZ Bank’s senior market strategist Daniel Hynes commented.

Meanwhile, US crude oil inventories recorded a significant draw of 8.33 million barrels in the week ending 12 June, according to American Petroleum Institute (API) estimates cited by Trading Economics.

The decline was substantially larger than market expectations of a 4.5 million-barrel draw.

A sharp reduction in US crude stockpiles is generally interpreted as a sign of stronger oil demand and can provide upward support to Brent's price.

“Inventories in the SPR [Strategic Petroleum Reserve] also continued to decline, dropping by 8.9 million barrels to 340.3 million, leaving stocks 385 million barrels below maximum capacity,” Trading Economics noted.

Downward pressure:

The US-Iran peace agreement continues to exert downward pressure on Brent crude futures, as the extension of the ceasefire by additional 60 days reinforced expectations that shipping through the Strait of Hormuz will gradually return to normal, improving prospects for global oil supply.

“Crude oil prices extended their decline, on expectations of a rebound in supply from the Middle East,” Hynes noted.

Under the agreement, the US is expected to lift its blockade of Iranian ports, while Iran will allow oil tanker traffic to resume through the Strait of Hormuz, which has been effectively closed since US and Israeli strikes on 28 February.

“Iran, US commit to returning Hormuz traffic to normal within 30 days,” VANDA Insights founder Vandana Hari said.

By Nachiket Tekawade and Tuhin Roy

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