Middle East tensions send Singapore’s VLSFO and LSMGO prices sharply higher

Singapore’s VLSFO and LSMGO prices have both crossed the $1,000/mt threshold amid rising crude prices, tightening availability and escalating Middle East tensions.

IMAGE: Container ship with working crane bridge in shipyard in Singapore. Getty Images

Since last Monday, Singapore’s VLSFO price has surged by about $547/mt, crossing the $1,000/mt mark to reach $1,104/mt earlier today—levels last seen during May–June 2022.

Meanwhile, the port's LSMGO price has risen sharply by more than$1,000/mtto $1,825/mt today, setting a new record high and surpassing the previous peak of around $1,413/mt recorded during May–June 2022.

During that earlier period, VLSFO and LSMGO prices in Singapore climbed primarily due to the spike in global crude oil prices following the Russia–Ukraine war, tighter VLSFO supply in Singapore, and reduced arbitrage inflows into Asia caused by strong backwardation in fuel oil markets.

The latest rally in VLSFO and LSMGO prices is being driven by escalating Middle East geopolitical tensions, which have sharply lifted Brent's price and disrupted trade flows through the Strait of Hormuz, a key route for global oil shipments.

“Seeing a big spike in [Singapore bunker] prices in line with Brent due the Middle East crisis,” a trader said.

Tightening availability of both grades has also contributed to the upward pressure on prices, a source said.

Recommended lead times for VLSFO in Singapore have widened to around 12–16 days, compared with 7–11 days last week. LSMGO now requires lead times of around 13–17 days, up from 4–11 days in the prior week, a source said.

Singapore's HSFO benchmark has also risen sharply, reaching multi-year highs as tensions in the Middle East escalate. Availability of the grade has also tightened, with recommended lead times now stretching to 11–15 days, compared with 8–11 days a week earlier.

Most suppliers have been offering stems on a fixed quantity offer basis since last week, meaning the supplier will deliver only the exact fuel quantity stated in the offer, with no volume tolerance allowed, another source said.

Additionally, firm bunker demand in Singapore—potentially as buyers secure fuel for longer voyages or in anticipation of further price increases—has also supported the upward momentum in the grades.

By Tuhin Roy

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