Europe & Africa Market Update 17 Mar

Regional bunker benchmarks have mostly decreased in the past day, while prompt supply remains tight in the Gibraltar Strait.

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

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($239/mt), and down in Gibraltar ($56/mt) and Rotterdam ($22/mt)
• LSMGO prices unchanged in Rotterdam, and down in Gibraltar ($115/mt)
• HSFO prices down in Gibraltar ($149/mt) and Rotterdam ($13/mt)
• B30-VLSFO prices up in Gibraltar ($34/mt), and down in Rotterdam ($21/mt)

Conventional bunker fuel prices have declined in Gibraltar in the past day, tracking a fall in Brent futures.

Gibraltar’s HSFO price has seen a steeper decline, compared to its VLSFO price. This has widened the port’s Hi5 spread by $93/mt in a single day, significantly increasing the economic benefit for scrubber fitted ships to bunker HSFO in the port.

Gibraltar’s HSFO is now priced at a small $8/mt discount to Rotterdam, compared with a $128/mt premium in the previous session. Gibraltar’s VLSFO premium over Rotterdam has now halved to $34/mt.

Additionally, the port's LSMGO benchmark has declined sharply over the past day, decreasing its premium over Rotterdam by $115/mt.

Supplies of all fuel grades remain tight in the Gibraltar Strait, with one supplier offering the earliest delivery on 25 March, a trader said.

Around 43 vessels are expected to arrive at Gibraltar port for bunkers between 17-27 March, shipping agent A Mateos & Sons said.

Brent

The front-month ICE Brent contract has declined by $1.14/bbl on the day, to trade at $104.13/bbl at 09.00 GMT.

Upward pressure:

Brent crude has traded above $100/bbl so far this week, as the conflict in the Middle East has shown no signs of easing in its third week.

Last week, Iran said the world should brace for oil at $200/bbl as its forces continue to target commercial vessels transiting the Strait of Hormuz, Reuters reported.

“There have been no signs of de-escalation,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Meanwhile, US forces have hit Iranian military bases on the strategic Kharg Island. US President Donald Trump warned that Washington could target Tehran’s key oil infrastructure on the island if the Strait of Hormuz remains closed.

“Oil prices spiked… as the US attacked Iran’s oil export lifeblood, Kharg Island,” Price Futures Group’s senior market analyst Phil Flynn said.

Downward pressure:

The International Energy Agency (IEA) has announced a major release of 400 million bbls from strategic reserves to ease the price shock that is currently rattling the global oil market. The news has put some downward pressure on Brent’s price.

The IEA’s pledge marks the “biggest emergency drawdown in IEA history – aimed at cooling off the red-hot crude market amid the ongoing chaos in the Middle East with Iran,” Flynn said.

Member countries in the Americas have committed 195.8 million bbls. Asia and Oceania members have pledged 108.6 million bbls, while Europe has committed 107.5 million bbls, the IEA said.

“The US is ponying up 172 million barrels, Japan chipping in 80 million, and EU heavyweights such as Germany and Austria pledging their shares,” Flynn added.

By Nachiket Tekawade and Aparupa Mazumder

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