Europe & Africa Market Update 27 May

Bunker prices across European and African ports have fallen, and prompt supplies are tight at the Gibraltar Strait ports.

IMAGE: Aerial view of the Bay of Gibraltar. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Gibraltar and Durban ($50/mt), and Rotterdam ($26/mt)
• LSMGO prices down in Gibraltar ($115/mt), Durban ($84/mt) and Rotterdam ($64/mt)
• HSFO prices down in Rotterdam ($49/mt) and Gibraltar ($33/mt)
• B30-VLSFO down in Rotterdam ($23/mt)

Bunker benchmarks have dropped over the past session, tracking brent's fall.

Gibraltar’s LSMGO price has fallen more sharply compared to Rotterdam's. This has narrowed Gibraltar’s price premium over Rotterdam by around $51/mt in a single day.

Gibraltar’s Hi5 spread has narrowed by around $17/mt to $44/mt.

Fuel availability remains tight in the Gibraltar Strait ports, with buyers advised to book stems around 7-10 days ahead to get good coverage from suppliers, a trader said.

Congestion remains high at the Port of Gibraltar, with around 18 vessels currently waiting for bunkers due to unavailability of space or barges, port agent MH Bland said.

Most suppliers in Gibraltar and neighbouring Algeciras are delayed by around 12-24 hours on deliveries, the port agent added.

Brent

The front-month ICE Brent contract has declined by $3.40/bbl on the day, to trade at $96.27/bbl at 09.00 GMT.

Upward pressure:

US military activity continues around the Persian Gulf, fueling supply disruption concerns and putting some upward pressure on Brent crude’s price.

Earlier this week, the US Navy struck missile launch sites in southern Iran, as well as boats allegedly attempting to lay mines in the Strait of Hormuz, the US Central Command (CENTCOM) reported.

Shortly after the airstrikes, Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed it had shot down US drones attempting to enter Iranian airspace, Al Jazeera reported.

“The renewed hostilities came despite the US touting progress toward a peace deal,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

Brent crude’s price has declined as market participants shifted focus from Middle East hostilities threats to optimism over a potential US-Iran peace deal.

“Prices are under pressure from improved sentiment around a potential US‑Iran deal,” two analysts from ING Bank wrote.

Earlier this week, Iran’s parliamentary speaker Mohammad Bagher Ghalibaf and foreign minister Abbas Araghchi traveled to Doha, Qatar, to push negotiations toward a final stage.

Market participants will remain focused on any development in the Middle East conflict until the Strait of Hormuz is completely open to vessel traffic.

By Nachiket Tekawade and Aparupa Mazumder

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