Europe & Africa Market Update 26 Aug

European and African regional bunker benchmarks have mostly declined, and prompt fuel availability is tight in Durban.

IMAGE: Aerial view of Durban port landscape. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Durban ($52/mt), Rotterdam ($46/mt) and Gibraltar ($31/mt)
• LSMGO prices down in Rotterdam, Gibraltar ($89/mt) and Durban ($52/mt)
• HSFO prices up in Durban ($41/mt), and down in Rotterdam ($28/mt) and Gibraltar ($19/mt)
• B30-VLSFO price up in Rotterdam ($10/mt), and down in Gibraltar ($88/mt)

Bunker fuel prices have dropped over the past day, tracking the Brent’s downward movement.

However, HSFO prices in Durban have jumped $41/mt day-on-day. Conversely, the VLSFO price in the South African port has slumped $52/mt in the last day.

Consequently, the Hi5 spread in the port has narrowed by $93/mt in a single day to $89/mt. This would significantly reduce the economic benefit for scrubber-fitted ships to bunker HSFO in the port.

Fuel availability is tight for prompt supplies in the South African port, with buyers recommended lead times of 5-7 days advised for all fuel grades, a trader said.

At least five vessels are expected to call at Durban for bunkers between 26 August–7 September, according to South Africa’s Transnet National Port Authority.

Rough north-easterly winds of more than 25 knots and high swells of more than 2.5 metres are forecast in the Durban area between 27-30 August.

Brent

The front-month ICE Brent contract has declined by $4.24/bbl on the day, to trade at $85.90/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price has felt some upward pressure amid the escalating conflict between US and Iran.

China has formally dismissed Washington’s economic campaign against Iran, calling it “illicit and unilateral.”

The US, yesterday, announced nearly 60 Iran-related sanctions and threatened imposing secondary sanctions on international allies who continue trading with Iran.  

By threatening secondary penalties on any nation continuing to trade with Tehran, these sweeping sanctions pull Beijing directly into the US-Iran economic crossfire.

Downward pressure:

Brent crude’s price has plunged below $90/bbl mark after the American Petroleum Institute (API) reported a surprise build in US crude stocks.

Commercial US crude oil inventories increased by 4.2 million bbls in the week ending 21 August, according to API estimates.

The increase was well above market expectations for a 1.9 million-bbl build.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

By Nachiket Tekawade and Aparupa Mazumder

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