East of Suez Market Update 27 July

Prices in East of Suez ports have fallen, while VLSFO availability is tight in Zhoushan.

IMAGE: Aerial view Zhoushan City, Zhejiang Province. Getty Images

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

• VLSFO prices down in Zhoushan ($95/mt), Singapore ($69/mt) and Fujairah ($34/mt)
• LSMGO prices down in Zhoushan ($132/mt), Singapore ($100/mt) and Fujairah ($92/mt)
• HSFO prices down in Zhoushan ($51/mt), Fujairah ($46/mt) and Singapore ($37/mt)
• B30-VLSFO price down in Singapore ($137/mt)

Zhoushan’s VLSFO price has dropped by $95/mt over the weekend, marking the sharpest decline among Asia’s three major bunker hubs. The steep fall has widened Zhoushan’s discount to $65/mt against Fujairah and $60/mt against Singapore.

VLSFO supply in Zhoushan remains constrained despite subdued demand, with suppliers recommending lead times of around nine days, down slightly from approximately 12 days previously. A source said the prolonged lead times are being driven by limited refinery output.

Recommended lead times for both LSMGO and HSFO remain broadly stable at around seven days.

In Taiwan, VLSFO and LSMGO can be delivered in around two days in Hualien and Taichung, while deliveries in Kaohsiung require lead times of roughly three days.

In Keelung, however, recommended lead times for both VLSFO and LSMGO have lengthened to 4–5 days from around three days previously due to ongoing barge constraints.

Brent

The front-month ICE Brent contract has declined by $8.47/bbl on the day from Friday, to trade at $89.21/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price is trading close to $90/bbl as market participants continue to monitor the situation in the Middle East.

Over the weekend, the US Central Command (CENTCOM) disabled another vessel in the Gulf of Oman, after its crew allegedly attempted to violate the blockade, it said.

The Mozambique-flagged M/T Lavine is no longer transiting to Iran after being disabled by US forces. The action marks the second commercial ship disabled by the US CENTCOM in recent weeks.

Downward pressure:

Brent’s price has plummeted from the previous week’s highs after Washington paused strikes on Iranian targets, raising hopes of a truce between the two countries.

“Oil prices fell sharply… as the US and Iran refrained from further military action, offering the first tangible signs of a potential de-escalation in tensions,” two analysts from ING Bank noted.

Oil market participants are seeing the weekend’s de-escalation as a temporary move, after the US struck Iran for 13 consecutive days.

The decline in Brent’s price reflects the oil market's “desperation for positive news,” ING Bank’s analysts said.

The pause is expected to give “diplomacy some space”, US Ambassador to the United Nations Mike Waltz said in an interview with CBS News, adding that military assets were still deployed in the region, should diplomacy fail.

By Tuhin Roy and Aparupa Mazumder

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