East of Suez Market Update 24 Feb

Prices in East of Suez ports have moved in mixed directions, and availability is good across all grades in Zhoushan.

IMAGE: Container ship and working crane bridge with Hong Kong skyline in the background. Getty Images

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

• VLSFO prices up in Fujairah ($6/mt), and down in Singapore ($3/mt) and Zhoushan ($1/mt)
• LSMGO prices up in Zhoushan ($8/mt), Fujairah ($6/mt) and Singapore ($4/mt)
• HSFO prices down in Zhoushan ($19/mt), Singapore ($12/mt) and Fujairah ($5/mt)
• B30-VLSFO prices down in Fujairah ($7/mt) and Singapore ($4/mt)

Fujairah’s VLSFO price has edged higher over the past day, while prices in Singapore and Zhoushan have remained largely unchanged. Zhoushan’s VLSFO continues to trade at premiums of $11/mt over Singapore and $6/mt over Fujairah.

Zhoushan’s HSFO price has fallen by $19/mt — the steepest drop among the three ports — while its VLSFO price has remained broadly stable. As a result, the port’s Hi5 spread has widened by $18/mt to $57/mt. Despite this increase, the spread is still below Fujairah’s $86/mt and Singapore’s $69/mt.

Availability in Zhoushan has improved across all grades amid subdued demand. Lead times for VLSFO and LSMGO have shortened to around 3–5 days, down from 7–10 days last week. HSFO now requires 5–7 days, compared with 7–10 days previously.

In Hong Kong, bunker lead times remain steady at about seven days for all grades, largely unchanged from recent weeks.

Brent

The front-month ICE Brent contract has gained by $0.52/bbl on the day, to trade at $71.60/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has moved higher, with market participants laser-focused on further developments in Iran – the fourth-largest OPEC member, producing around 3.2 million b/d of crude oil.

Over the weekend, US President Donald Trump affirmed “over the next, probably, 10 days,” Washington will reach a deal with Tehran or take military action against it.

“Uncertainty over potential US action in Iran builds, with the US continuing to move military assets into the region and US President Donald Trump giving Iran a deadline to come to a nuclear deal,” two analysts from ING Bank said.

Meanwhile, the Indian Directorate General of Shipping (DGS) issued a strong advisory to all Indian seafarers and shipping companies to avoid Iranian territorial waters while transiting the Strait of Hormuz.

“The Strait of Hormuz continues to serve as the world’s most critical energy chokepoint,” Price Futures Group’s senior market analyst Phil Flynn said.

Downward pressure:

While there are no significant downward pressures on Brent’s price today, market participants will keep an eye on renewed possibilities of a negotiation between the US and Iran, as they prepare for a third round of negotiations later this week.

“In the case of a [Iran-US] deal, we would see a fairly aggressive erosion of the risk premium currently priced into the market – although reaching a deal is easier said than done,” ING Bank’s analysts added.

Representatives from both countries will meet for another round of discussion about the Iran’s nuclear ambitions, on Thursday in Geneva, Switzerland.

By Tuhin Roy and Aparupa Mazumder

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