East of Suez Market Update 21 Oct

Bunker prices in major East of Suez ports have fallen across all grades.

IMAGE: Aerial view of Port of Busan in South Korea. Busan Port Authority

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

• VLSFO prices down in Zhoushan ($19/mt), Fujairah and Singapore ($14/mt)
• LSMGO prices down in Fujairah ($44/mt), Zhoushan ($36/mt) and Singapore ($15/mt)
• HSFO prices down in Singapore ($22/mt), Fujairah ($9/mt) and Zhoushan ($8/mt)

Zhoushan’s VLSFO price has fallen by $19/mt, the steepest decline among the three major Asian bunker ports.

The grade is now priced at an $8/mt premium to Singapore and a $3/mt premium to Hong Kong. But it trades at a $35/mt discount to Fujairah and a $33/mt discount to Port Klang.

The price gap is even wider against Tokyo and Busan, where VLSFO is around $100/mt and $139/mt more expensive than in Zhoushan, respectively.

Zhoushan’s Hi5 spread has also narrowed from $69/mt to $58/mt, putting it close to Singapore’s $57/mt and well below Busan’s $84/mt, Tokyo’s $105/mt and Fujairah’s $201/mt.

Busan’s HSFO price has dropped by $26/mt, while its VLSFO has gained $7/mt on the day, widening the port’s Hi5 spread from $51/mt to $84/mt.

Bunker supply remains strained in Zhoushan despite low demand, with suppliers recommending lead times of around 11 days for VLSFO, LSMGO and HSFO.

Brent

The front-month ICE Brent contract has dropped by $1.28/bbl on the day, to trade at $110.13/bbl at 09.00 GMT.

Downward pressure:

The International Energy Agency (IEA) is prepared to coordinate further releases of oil from emergency stocks with its member countries, Reuters reported, citing IEA executive director Fatih Birol.

The agency announced last week that its member countries had collectively released about 330 million bbls of crude oil and petroleum products from strategic reserves so far, amid the ongoing conflict in the Middle East.

Upward pressure:

Iran’s President Masoud Pezeshkian discussed mediation efforts to resolve the Middle East crisis with Pakistan’s army chief in Tehran on Tuesday, but took a hard line, saying there would be no talks with Washington until its demands to reopen the Strait of Hormuz were met, according to media reports.

Brent futures continue to trade above $110/bbl as security risks persist for vessels passing through the strait. Ship-tracking firm Kpler reported on Monday that at least 18 vessels had been attacked in the region over the past two weeks.

“While Persian Gulf oil flows improved in the second week of October, the recovery looks under threat amid the increased attacks, with preliminary data pointing to another slowdown,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

US crude oil stocks dropped by 4.93 million bbls in the week ending 16 October, according to estimates from the American Petroleum Institute (API), as cited by Trading Economics. A decline in US crude stocks usually signals stronger demand and can offer some support to Brent’s price.

By Konica Bhatt and Shilpa Sharma

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