Europe & Africa Market Update 24 Feb

Bunker fuel prices across European and African ports have moved in mixed directions, and bunker availability is stable in Durban.

IMAGE: Aerial view of Durban port landscape. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($16/mt) and Gibraltar ($2/mt), and down in Rotterdam ($1/mt)
• LSMGO prices up in Gibraltar ($10/mt) and Rotterdam ($3/mt)
• HSFO prices up in Durban ($5/mt) and Rotterdam ($2/mt), and unchanged in Gibraltar
• B30-VLSFO prices up in Rotterdam ($1/mt), and down in Gibraltar ($3/mt)

Durban’s VLSFO price has recorded the steepest increase among the three major ports. The price jump has widened Durban’s premium over Gibraltar’s by around $14/mt in a single day.

Also, bunkering VLSFO in Durban now costs around $130/mt more than in Rotterdam.

Durban’s HSFO price has gained less sharply. This has widened the port’s Hi5 spread by $11/mt to around $75/mt. This could significantly increase the incentive for ships to bunker the lower-priced HSFO at the port.

Both VLSFO and HSFO fuel grades are available promptly in the South African port, a trader said.

Around six vessels are expected to call at Durban for bunkers between 25 February – 9 March, shipping agent Trade Ocean said.

Meanwhile, congestion has ticked up in Gibraltar, with around 10 vessels awaiting bunkers as of Tuesday morning, port agent MH Bland said. Some suppliers are delayed by around a day, the port agent added.

Brent

The front-month ICE Brent contract has gained by $0.52/bbl on the day, to trade at $71.60/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price has moved higher, with market participants laser-focused on further developments in Iran – the fourth-largest OPEC member, producing around 3.2 million b/d of crude oil.

Over the weekend, US President Donald Trump affirmed “over the next, probably, 10 days,” Washington will reach a deal with Tehran or take military action against it.

“Uncertainty over potential US action in Iran builds, with the US continuing to move military assets into the region and US President Donald Trump giving Iran a deadline to come to a nuclear deal,” two analysts from ING Bank said.

Meanwhile, the Indian Directorate General of Shipping (DGS) issued a strong advisory to all Indian seafarers and shipping companies to avoid Iranian territorial waters while transiting the Strait of Hormuz.

“The Strait of Hormuz continues to serve as the world’s most critical energy chokepoint,” Price Futures Group’s senior market analyst Phil Flynn said.

Downward pressure:

While there are no significant downward pressures on Brent’s price today, market participants will keep an eye on renewed possibilities of a negotiation between the US and Iran, as they prepare for a third round of negotiations later this week.

“In the case of a [Iran-US] deal, we would see a fairly aggressive erosion of the risk premium currently priced into the market – although reaching a deal is easier said than done,” ING Bank’s analysts added.

Representatives from both countries will meet for another round of discussion about the Iran’s nuclear ambitions, on Thursday in Geneva, Switzerland.

By Nachiket Tekawade and Aparupa Mazumder

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