East of Suez Market Update 15 July

Regional bunker benchmarks have moved in mixed directions, while LSMGO availability is good across several Omani ports.

IMAGE: Port of Salalah in Oman during the twilight hours. Getty Images

Changes on the day to 17.00 SGT (09.00 GMT) today:

• VLSFO prices up in Fujairah ($32/mt), and down in Singapore ($13/mt) and Zhoushan ($6/mt)
• LSMGO prices up in Singapore ($65/mt), and down in Zhoushan ($30/mt) and Fujairah ($22/mt)
• HSFO prices up in Singapore ($8/mt), and down in Zhoushan ($19/mt) and Fujairah ($3/mt)
• B30-VLSFO price down in Singapore ($20/mt)

Fujairah’s VLSFO price has climbed by $32/mt over the past day, while prices in Singapore and Zhoushan have declined. As a result, Fujairah’s VLSFO now trades at premiums of $63/mt to Zhoushan and $45/mt to Singapore.

Despite escalating US-Iran hostilities in the Strait of Hormuz, bunker fuel availability in Fujairah has improved. Supply of VLSFO and LSMGO has eased, with several suppliers now able to accommodate prompt delivery requests. HSFO availability, however, has tightened and is mostly being offered on a firm enquiry basis.

Similar supply conditions are being reported at the neighbouring UAE bunker hub of Khor Fakkan.

“Following the recent market volatility, the situation has become slightly more tense. Operations are still continuing across the region, although there are some operational pressures and uncertainties,” an Oman-based trader said.

One supplier is recommending lead times of just 2–3 days at the major Omani ports of Duqm, Muscat, Sohar and Salalah. However, high wave activity forecast for 15–19 July could temporarily disrupt bunkering operations in Salalah, the source added.

Brent

The front-month ICE Brent contract has declined by $2.52/bbl on the day, to trade at $84.68/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude has continued to trade well above $80/bbl mark as tension in the Middle East remained fairly elevated.

Another commercial vessel came under attack while transiting the Strait of Hormuz, 13 nautical miles (NM) southeast of Limah, Oman yesterday, the United Kingdom Maritime Trade Operations (UKMTO) reported.

“Observable traffic in the strait [of Hormuz] all but ceased,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Earlier this week, a tanker was approached by six small boats about 50 NM south of Aden, Yemen. One small boat has fired warning shots, the UKMTO reported. “The other 5 small boats have remained at 1NM,” it added.

“The recent attacks on ships by both Iran and the US are making these journeys increasingly risky,” Hynes added.

Downward pressure:

Brent’s rally has lost some steam after US President Donald Trump cancelled plans to impose a 20% fee of a cargo’s value for the US to assist in safely transiting the Strait of Hormuz.  

Trump walked back from his previous comments, replacing the 20% “reimbursement fee” with trade deals with the various Gulf countries.

Oil broke above $85/bbl earlier this week after Trump proposed the fee and named the US “guardian of the Hormuz Strait.”

The US President did not disclose the specifics of the trade and investment deals that he claims Gulf nations will be striking with Washington.

Washington is signalling that “it is willing to compromise,” after Trump backed away from his latest plan, Hynes remarked.

By Tuhin Roy and Aparupa Mazumder

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