Europe & Africa Market Update 2 June

Bunker prices across European and African ports have moved in mixed directions, while prompt availability remains tight at the Gibraltar Strait ports.

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

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($32/mt) and Rotterdam ($1/mt), and down in Gibraltar ($9/mt)
• LSMGO prices up in Gibraltar ($25/mt), and down in Durban ($82/mt) and Rotterdam ($16/mt)
• HSFO prices up in Durban ($144/mt), unchanged in Rotterdam, and down in Gibraltar ($8/mt)
• B30-VLSFO down in Gibraltar ($69/mt) and Rotterdam ($41/mt)

Over the past session, Gibraltar’s LSMGO price has increased steeply, while Rotterdam’s LSMGO price has dropped.

A 50-150 mt stem, fixed in Gibraltar at $1,295/mt, pushed the benchmark higher at the port. Consequently, Gibraltar’s price premium over Rotterdam has widened by $41/mt to $131/mt in a single day.

Fuel availability is tight in the Gibraltar Strait ports, with buyers advised to book stems around 7-10 days in advance to get good coverage from suppliers, a trader said.

There are 10 vessels currently awaiting bunkers at Gibraltar, and most suppliers are delayed by around 12-24 hours, port agent MH Bland said.

Brent

The front-month ICE Brent contract has declined by $0.89/bbl on the day, to trade at $93.26/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has felt upward pressure following reports that Iran is stepping back from the ongoing negotiations with Washington and moving ahead with a complete blockade of the Strait of Hormuz.

The breakdown in negotiations comes shortly after Israel’s military moved further inside Lebanon, raising concerns of a broader Middle East conflict.

Meanwhile, Oman’s Maritime Security Centre (MSC) issued an advisory for all vessels to exercise extreme caution after sighting a suspected floating mine in the region.

Crude oil prices can surge to $180/bbl by August if the US-Iran conflict intensifies and the Strait of Hormuz remains closed, Jorge León, head of geopolitical analysis at Rystad Energy, said in an interview with CNBC.

“Oil price direction continues to be dictated by Iran-related headlines amid considerable uncertainty over how negotiations between the US and Iran are progressing,” two analysts from ING Bank noted.

Downward pressure:

Despite the absence of significant bearish drivers, Brent’s price has declined today.

Market participants will be watching closely for any further signs of progress in US-Iran negotiations.

“President Trump says that negotiations are continuing,” ING Bank’s analysts noted.

Negotiators from both sides agreed on a draft memorandum of understanding last week to extend the ceasefire and lift restrictions on shipping through the Strait of Hormuz.

By Nachiket Tekawade and Aparupa Mazumder

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