Europe & Africa Market Update 22 May

Bunker prices across European and African ports have mostly gained, and prompt supplies are tight in the Gibraltar Strait.

IMAGE: View from the Rock of Gibraltar, UK to Algeciras, Spain. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($51/mt), Gibraltar ($16/mt) and Rotterdam ($5/mt)
• LSMGO prices up in Durban ($236/mt) and Gibraltar ($11/mt), and down in Rotterdam ($1/mt)
• HSFO prices up in Rotterdam ($1/mt), and down in Gibraltar ($16/mt)
• B30-VLSFO prices down in Gibraltar ($6/mt) and Rotterdam ($4/mt)

Most conventional bunker benchmarks in the three major ports have gained in the last day, tracking the gain in Brent’s price.

However, Gibraltar’s HSFO price has dropped. A 500-1500 mt HSFO stem, fixed at a low price of $687/mt, has put downward pressure on the benchmark.

Meanwhile, the port’s VLSFO price has risen significantly. These diverging price movements have widened the port’s Hi5 spread by around $32/mt in a single day, significantly increasing the economic benefit for scrubber-fitted vessels to bunker HSFO in the port.

Bunker availability is tight at the Gibraltar Strait ports for prompt delivery dates, a trader told ENGINE. Buyers are advised to book stems around 7-10 days ahead, the trader said.

Deliveries are mostly running on time in Gibraltar, with some suppliers delayed around 4-6 hours at the most and just six vessels currently queued up for bunkering in the port as of Friday morning, according to port agent MH Bland.

In neighbouring Algeciras, few suppliers could be delayed by almost a day, the port agent said.

Brent

The front-month ICE Brent contract has gained by $0.83/bbl on the day, to trade at $105.81/bbl at 09.00 GMT.

Upward pressure:

Brent’s price is poised to end the week above $100/bbl, following reports that Iran’s new Supreme Leader remains unwilling to abandon the country’s uranium enrichment program, a major sticking point in efforts to secure a peace deal.

Mojtaba Khamenei, Iran’s new hardline Supreme Leader, has issued an order for uranium-powered weapons to remain within Iran, Reuters reported.

The news comes days after US President Donald Trump said Tehran will not be allowed to continue uranium enrichment under the peace deal.

The conflict in interest is expected to complicate the fragile peace deal between the US and Iran – further adding upward pressure on oil prices, market analysts said.

“The issues at stake remain the location of Iran’s uranium stockpile and control over the Strait of Hormuz,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

While there are no significant downward pressures on Brent’s price today, market participants will be focused on any suggestions of progress in US-Iran negotiations.

Washington is in the “final stages” of the ongoing negotiations with Tehran, Reuters reported citing Trump.

“Speculation is mounting about a peace deal between the US and Iran. Both sides have signalled progress in recent talks,” Hynes said.

By Nachiket Tekawade and Aparupa Mazumder

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