East of Suez Market Update 15 Sep

Most prices in East of Suez ports have moved higher, and availability of all grades remains tight in Fujairah amid rising US-Iran tensions over the Strait of Hormuz.

IMAGE: Bunker barge at berth in Fujairah, UAE. Port of Fujairah

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

• VLSFO prices up in Fujairah ($15/mt), and down in Zhoushan ($61/mt) and Singapore ($3/mt)
• LSMGO prices up in Fujairah ($99/mt), Zhoushan ($92/mt) and Singapore ($32/mt)
• HSFO prices up in Fujairah ($41/mt), Zhoushan ($17/mt), and down in Singapore ($5/mt)

Fujairah's VLSFO price has climbed by $15/mt on the day. The price now stands at a $94/mt premium to Singapore and a $133/mt premium to Zhoushan.

The port’s HSFO price has risen by a steeper $41/mt. Consequently, Fujairah's Hi5 spread has narrowed from $265/mt to $239/mt, but remains well above Singapore's $140/mt and Zhoushan's $125/mt.

Availability in Fujairah remains tight across all major grades, with US-Iran tensions over the Strait of Hormuz continuing to disrupt supply and fuel oil imports into the port falling sharply. Tight supply is also being reported at nearby Khor Fakkan, where availability across all grades remains constrained, according to a Middle East-based source.

Brent

The front-month ICE Brent contract has inched $0.09/bbl lower on the day, to trade at $107.89/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has remained largely steady, continuing to trade above the $107/bbl threshold, as the conflict in the Middle East persists.

What started as a US-Iran confrontation, has rapidly metastasized into a regional crisis, prompted by the escalation between Yemen’s Iran-aligned Houthi militants and Saudi Arabia.

The Houthis have targeted Saudi Arabia’s military facilities and infrastructure this week, after hitting Riyadh’s crucial 1,200 km East-West Pipeline, a favourable alternative to export crude through the Red Sea terminal at Yanbu, to circumvent the Strait of Hormuz.

“Oil prices remain firmly supported, with that floor unlikely to give way until markets get clearer visibility on Saudi supply after the East–West pipeline shutdown,” two analysts from ING Bank noted.

Downward pressure:

While there are no major downward pressures acting on Brent’s price today, market analysts will keep an eye out for US crude stocks data scheduled for release later this week.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

By Tuhin Roy and Aparupa Mazumder

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