East of Suez Market Update 19 Mar

Prices in East of Suez ports have soared, and LSMGO supply is steady in Zhoushan.

IMAGE: Logistics and transportation of container and cargo ships with a crane in Singapore. Getty Images

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

• VLSFO prices up in Singapore ($133/mt), Fujairah ($128/mt) and Zhoushan ($89/mt)
• LSMGO prices up in Singapore ($193/mt), Fujairah ($182/mt) and Zhoushan ($158/mt)
• HSFO prices up in Fujairah ($104/mt), Singapore ($101/mt) and Zhoushan ($86/mt)
• B30-VLSFO prices up in Singapore ($164/mt)

VLSFO prices across the three major Asian bunker ports have surged by a wide margin of $89–133/mt over the past day. The rally is being driven by elevated crude prices, tightening supply, stronger demand, and ongoing geopolitical tensions in the Middle East.

Brent crude has climbed above $110/mt during the day, following a series of incidents targeting energy infrastructure across the Gulf. These attacks were carried out by Iran in response to Israeli strikes on its South Pars gas field, according to market analysts.

LSMGO prices have also risen sharply, with levels across the three ports nearing the $2,000/mt mark. In Singapore, LSMGO is priced at premiums of $171/mt over Zhoushan and $74/mt over Fujairah.

Lead times for LSMGO in Singapore have shortened significantly to 6–9 days, down from 13–17 days last week. In Zhoushan, lead times remain largely steady at 5–10 days.

Brent

The front-month ICE Brent contract has risen by $12.66/bbl on the day, to trade at $115.55/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has surged by more than $12/bbl after Iran targeted energy infrastructure across the Middle East in response to Israeli strikes on Iran’s South Pars gas field yesterday.

Key Gulf energy producers, including Saudi Arabia, Kuwait, Iraq and Qatar, continue to face Iranian strikes, with Saudi Aramco’s Samref refinery at the Red Sea port of Yanbu among the main targets in missile attacks earlier today.

“This raises fears of a more prolonged disruption to Persian Gulf energy supplies,” two analysts from ING Bank said.

With no signs of de-escalation, Brent is likely to rally this week, according to market analysts.

“The UAE’s daily oil output is down by 1.8mb/d [1.8 million b/d] since February. Kuwait’s oil production has dropped to about 1.3m b/d [1.3 million b/d] from 2.6mb/d [2.6 million b/d] last month,” ANZ Bank’s senior commodity strategist Daniel Hynes said, citing Bloomberg data.

Downward pressure:

Brent’s price has come under some downward pressure after the US Energy Information Administration (EIA) reported a sizeable build in US crude stocks.

Commercial US crude oil inventories increased by 6.2 million bbls to 449 million bbls in the week ending 13 March, according to data from the EIA.

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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