Europe & Africa Market Update 28 Apr

Most bunker benchmarks at European and African ports have moved higher, while prompt supplies are tight in the Gibraltar strait.

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

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Rotterdam ($17/mt) and Gibraltar ($16/mt) and down in Durban ($43/mt)
• LSMGO prices up in Rotterdam ($71/mt), Gibraltar ($43/mt) and Durban ($28/mt)
• HSFO prices up in Durban ($57/mt), Rotterdam ($10/mt) and Gibraltar ($3/mt)
• B30-VLSFO prices up in Gibraltar ($17/mt) and Rotterdam ($15/mt)

Rotterdam’s LSMGO price has gained more steeply compared to Gibraltar. Two higher-priced stems of 0-50 mt and 50-150 mt, fixed at the Dutch port between $1,300-1,322/mt, have supported the price gain.

This has narrowed Gibraltar’s price premium by around $28/mt in the past day.

Algeciras' LSMGO price gained almost twice the grade's increase in Gibraltar. Consequently, Algeciras’ LSMGO is now offered at a $26/mt price premium over Gibraltar, compared to a $29/mt discount seen yesterday.

Prompt fuel supplies are tight in the Gibraltar strait, and around a week of notice is required to get deliveries of any fuel type, a trader told ENGINE.

Around 12 vessels are currently awaiting bunkers in the port for bunkers, port agent MH Bland said.

Brent

The front-month ICE Brent contract has gained by $3.34/bbl on the day, to trade at $111.04/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price has continued to trade north of $110/bbl as US-Iran negotiations remain stalled and transit through the Strait of Hormuz stays constrained.

In an interview with Fox News yesterday, US secretary of state Marco Rubio said that Washington will not accept Iran’s alleged control over the Strait of Hormuz.

“If what they [Iran] mean by opening the straits is, “Yes, the straits are open as long as you coordinate with Iran, get our permission or we’ll blow you up, and you pay us,” that’s not opening the straits,” Rubio said.

The remarks came after negotiations between Washington and Tehran were cancelled over the weekend.

Prior to the Middle East war – which is now in its eighth week – the Strait of Hormuz carried roughly 20% of the world’s seaborne crude oil flows.

“After considering the diversion of some oil via pipelines and the trickle of tankers still making it through the Strait of Hormuz, around 14m b/d [14 million b/d] of oil supply is currently disrupted,” remarked ING Bank’s head of commodities strategy Warren Patterson.

Downward pressure:

Brent’s price has felt some downward pressure from the latest positions data, as money managers and hedge funds decreased their net-long bets on ICE Brent futures over the last reporting week.

Speculators sold a little over 4,000 lots as of last Tuesday, decreasing net-long positions in Brent futures to about 369,000 lots, according to futures and options data from ICE Futures Europe.

When speculators reduce net-long positions, prices tend to decline. Conversely, when they boost these positions, oil prices typically rise, leading to a cycle where their actions can influence oil prices and the market.

By Nachiket Tekawade and Aparupa Mazumder

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