East of Suez Market Update 2 Sep

Regional bunker benchmarks have risen, and availability of all grades remains tight in Malaysia’s Port Klang.

IMAGE: An old wooden cargo ship setting out from Port Klang. Getty Images

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

• VLSFO prices up in Singapore ($42/mt), Fujairah and Zhoushan ($18/mt)
• LSMGO prices up in Singapore ($45/mt), Fujairah ($42/mt) and Zhoushan ($12/mt)
• HSFO prices up in Singapore ($36/mt), Fujairah ($17/mt) and Zhoushan ($11/mt)

Singapore’s VLSFO price has climbed by $42/mt over the past day, the sharpest increase among the three major Asian bunker ports. Despite the rise, Singapore’s VLSFO remains at discounts of $31/mt and $28/mt to Zhoushan and Fujairah, respectively.

Supply conditions in Singapore remain tight, with VLSFO lead times now at around 9-16 days, compared with 7-19 days a week earlier. Reduced availability and shortages of blending components have tightened bunker supply in Singapore.

HSFO supply has also become more constrained, with lead times extending to 8-16 days from 6-12 days previously. LSMGO lead times, meanwhile, have widened to 2-11 days, compared with 4-9 days a week earlier.

Supply remains constrained at Malaysia’s Port Klang. Prompt VLSFO availability is tight, while LSMGO supply remains limited and HSFO continues to face supply pressure.

Brent

The front-month ICE Brent contract has gained by $2.40/bbl on the day, to trade at $94.77/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has rallied as tensions between the US and Iran escalated this week.

Oil has reached its “highest level in more than a month,” as tensions in the Persian Gulf escalated further, two analysts from ING Bank noted.

The US Central Command (CENTCOM) has resumed strikes on Iranian assets, while Tehran has warned of major consequences if Washington continues its drone barrage in the region.

“Iran hit two oil tankers in the region yesterday. The US, meanwhile, carried out additional overnight strikes on Iranian targets, adding fresh geopolitical risk premium to the market,” ING Bank’s analysts added.

Downward pressure:

Brent’s price has come under some downward pressure following a positive statement from US secretary of energy Chris Wright.

‌Wright claimed ​that 17 ​million bbls of ⁠crude oil transited ​the Strait ​of Hormuz on Monday, Reuters reported.

The uptick in flows ​marked the ​highest level of ‌crude ⁠oil to pass through the narrow waterway in recent months, Reuters added citing Wright.

“When you factor in bypass volumes, it suggests Persian Gulf oil flows are above pre-war levels. But these numbers are uncertain,” ING Bank’s analysts added.

By Tuhin Roy and Aparupa Mazumder

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