Europe & Africa Market Update 27 Aug

European and African bunker fuel prices have recorded gains, while cruise ship demand has tightened fuel availability in Piraeus.

IMAGE: Passenger ships in the Port of Piraeus. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($30/mt), Rotterdam and Gibraltar ($18/mt)
• LSMGO prices up in Durban ($75/mt), Gibraltar ($25/mt) and Rotterdam ($22/mt)
• HSFO prices up in Gibraltar, Durban ($28/mt) and Rotterdam ($11/mt)
• B30-VLSFO prices up in Gibraltar ($14/mt) and Rotterdam ($12/mt)

Bunker fuel prices have mostly moved up over the past day, tracking Brent's gains.

However, defying the market trend, LSMGO in Greece’s Piraeus has moved $19/mt down. The price of LSMGO off Malta has also dropped $19/mt over the past day, pressured by a lower priced 150-500 mt stem, fixed at $1,290/mt.

Meanwhile, Istanbul’s LSMGO price has moved up $41/mt.

Consequently, Piraeus' LSMGO benchmark remains almost at par with Malta’s LSMGO, while it has flipped to a $52/mt discount to Istanbul, compared to an $8/mt price premium seen yesterday.

Fuel availability is tight for all fuel grades in the Greek port as it is experiencing strong demand due to cruise ship season. Buyers are recommended lead times of at least a week to secure supplies at competitive prices, a trader told ENGINE.

Piraeus Port Authority's cruise schedule lists 104 cruise calls at the port in August and a further 112 in September, though not every call involves bunkering.

Brent

The front-month ICE Brent contract has gained by $1.73/bbl on the day, to trade at $87.63/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has felt some upward pressure amid worsening ties between the US and Iran.

Washington's sweeping economic sanctions and Tehran’s territorial chokehold on the Strait of Hormuz has left the global oil market hostage to violent, unpredictable price swings.

The US announced nearly 60 Iran-related sanctions and threatened of secondary sanctions on the Islamic Republic’s international allies, like China, earlier this week. 

Beijing dismissed Washington’s economic campaign against Iran, pulling directly into the US-Iran crossfire.

Downward pressure:

Brent’s price gains were capped by some positive news coming out of the latest Iran-Oman meeting.

Both countries’ foreign ministers held constructive talks to establish a temporary navigational corridor through the Strait of Hormuz – jointly controlled by Tehran and Muscat.

“Iran and Oman appear closer to an agreement on shipping routes through the Strait of Hormuz,” two analysts from ING Bank noted.

Market analysts have interpreted the news as a potential step toward restoring some commercial navigation through the waterway that once carried one-fifth of global seaborne oil flows.

“We would likely need to see the US lift its blockade on Iranian ports and ease sanctions on Iran before we see any move towards normalisation,” ING Bank’s analysts said.

By Nachiket Tekawade and Aparupa Mazumder

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