East of Suez Market Update 25 May

Bunker fuel prices in East of Suez ports have tracked Brent’s downward trend, and availability across all grades is tight in Fujairah.

IMAGE: Aerial view of Saudi Arabian port of Jeddah with cargo ships and dry docks. Getty Images

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

• VLSFO prices down in Singapore ($29/mt), Zhoushan ($25/mt) and Fujairah ($17/mt)
• LSMGO prices down in Fujairah ($78/mt), Singapore ($77/mt) and Zhoushan ($40/mt)
• HSFO prices up in Fujairah ($45/mt), Zhoushan ($26/mt) and Singapore ($21/mt)
• B30-VLSFO price down in Singapore ($49/mt)

Fujairah’s HSFO price has recorded the steepest decline amongst the three major Asian bunker hubs. Despite the fall, the port’s HSFO is currently trading at premiums of $40/mt and $14/mt over Singapore and Zhoushan.

Meanwhile, Fujairah’s VLSFO price has recorded a smaller decline compared to HSFO – widening the port’s Hi5 spread from $211/mt on Friday, to $239/mt today. At $239/mt, Fujairah’s Hi5 spread remains higher than Singapore’s $164/mt and Zhoushan’s $144/mt.

Bunker availability remains tight in Fujairah, with all offers subject to firm enquiry. Demand has dropped significantly as many vessels are still waiting to transit the Strait of Hormuz – given that the vital waterway reopens soon.

VLSFO availability in Saudi Arabia’s Jeddah remains tight while LSMGO supply is stable.

Brent

The front-month ICE Brent contract has declined by $7.30/bbl on the day from Friday, to trade at $98.51/bbl, at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price has felt little immediate upward pressure today, with market traders continuing to factor in the risk of ongoing peace talks breaking down again before a final agreement is reached.

Last week, officials from the European Union (EU) warned that oil prices are expected to remain above what they were prior to the onset of the war on 28 February, at least until the end of next year.

EU economy commissioner Valdis Dombrovskis said that higher energy prices are primarily responsible for keeping inflation elevated in Europe through 2027, the Associated Press (AP) reported.

While a peace deal between the US and Iran will offer some relief to the oil market, questions remain over how quickly oil flows through the Strait of Hormuz are to recover to pre-war levels.

“While talks continue, vessels are still trickling through the Strait of Hormuz,” ING Bank’s head of commodities strategy Warren Patterson noted. “The big unknown is how the US and Iran will resolve their differences on Iran’s nuclear programme,” he added.

Downward pressure:

Brent crude’s price has plunged at the start of this week, amid signs of progress in the ongoing ceasefire negotiations between Washington and Tehran.

US President Donald Trump wrote on social media platform Truth Social yesterday that talks with Tehran are proceeding in an “orderly and constructive manner”, putting downward pressure on oil prices.

“Crude oil prices fell… as the market pondered a peace deal between the US and Iran that could ultimately reopen the Strait of Hormuz,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Additionally, Baker Hughes reported a big rise in US crude oil rig activity. The total number of rigs drilling for crude oil in the US rose by 10 to 425 units last week.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

By Aparupa Mazumder

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