Europe & Africa Market Update 26 Mar

Bunker benchmarks in European and African ports have gained, while 4-5 days of lead time is recommended for deliveries in the ARA hub.

IMAGE: View of the entrance to the Port of Rotterdam, Netherlands. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($140/mt), Gibraltar ($59/mt) and Rotterdam ($55/mt)
• HSFO prices up in Durban ($103/mt), Gibraltar ($51/mt) and Rotterdam ($12/mt)
• LSMGO prices up in Gibraltar ($104/mt) and Rotterdam ($97/mt)
• B30-VLSFO prices up in Gibraltar ($73/mt) and Rotterdam ($16/mt)

Bunker benchmark prices have surged in the past day, matching the steep gain in Brent's price.

Rotterdam’s VLSFO price has climbed more sharply, compared to its HSFO benchmark. A lower-priced 150-500 mt HSFO stem, fixed at $646/mt, has limited the benchmark’s gain.

Consequently, the port’s Hi5 spread has almost doubled in the past session to around $87/mt. This significantly increases the economic benefit for scrubber-fitted ships to bunker HSFO in the port.

Fuel availability is stable in the ARA bunkering hub, but lead times of around 4-5 days are recommended to get good coverage from suppliers, a trader said.

Gibraltar's Hi5 spread is wider than Rotterdam's, at around $125/mt.

Congestion persists in Gibraltar from a weather-related disruption earlier in the week, with around 17 vessels currently awaiting bunkers in the port, and most suppliers running around 1-2 days delayed on deliveries, port agent MH Bland said.

Brent

The front-month ICE Brent contract has gained by $7.09/bbl on the day, to trade at $105.89/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has bounced back above $100/bbl mark as Iran rejected Washington’s claims of negotiating with Tehran.

The US has put forward a 15-point ceasefire plan to Iran that could open the door to a month-long truce. Tehran, however, has dismissed claims that any direct negotiations with the US are underway.

“Has the level of your inner struggle reached ‌the ⁠stage of you negotiating with yourself?” Reuters reported, quoting Iranian military spokesperson Ebrahim Zolfaqari as saying.

The Strait of Hormuz – which is highly critical for crude oil flows – continues to remain closed to commercial vessel movement, adding upward pressure on Brent’s price, according to analysts.

“For oil, the crucial element is the guarantee of safe and unrestricted passage for international shipping through the Strait of Hormuz, effectively reopening it to all vessels,” Price Futures Group’s senior market analyst Phil Flynn wrote.

Downward pressure:

Brent crude’s price has felt some downward pressure after the US Energy Information Administration (EIA), reported a sizeable increase in US crude stocks.

Commercial US crude oil inventories increased by 6.9 million bbls to 456 million bbls in the week ending 20 March, according to data from the EIA.

Yesterday, the American Petroleum Institute (API) reported a rise of 2.3 bbls in the week.

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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