East of Suez Market Update 27 May

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

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

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

• VLSFO prices down in Singapore ($44/mt), Fujairah ($40/mt) and Zhoushan ($16/mt)
• LSMGO prices down in Zhoushan ($64/mt), Singapore ($39/mt) and Fujairah ($31/mt)
• HSFO prices down in Zhoushan ($27/mt), Fujairah ($25/mt) and Singapore ($24/mt)

Zhoushan’s HSFO price has declined by $27/mt – the steepest fall among the three major Asian bunker hubs. The Chinese port’s HSFO is currently trading at a $20/mt premium to Singapore and a $14/mt discount to Fujairah.

Bunker suppliers in Zhoushan are facing delivery backlogs due to weather-related disruptions. Cargo loading and supply are expected to face some delays due to dense fog.  

Prompt fuel availability in Zhoushan is moderately tight. Recommended lead times for VLSFO is 5-7 days, while HSFO and LSMGO require about 4-6 days.

Meanwhile, Singapore’s LSMGO price recorded a steep decline after a lower-priced 50-150 mt stem was fixed at the port yesterday.

Lead times for LSMGO in Singapore now stand at 10-12 days, up from 5-10 days previously. HSFO and VLSFO lead times stand at 9-11 days and 13-18 days, respectively.

Brent

The front-month ICE Brent contract has declined by $3.40/bbl on the day, to trade at $96.27/bbl, at 17.00 SGT (09.00 GMT) today.

Upward pressure:

US military activity continues around the Persian Gulf, fueling supply disruption concerns and putting some upward pressure on Brent crude’s price.

Earlier this week, the US Navy struck missile launch sites in southern Iran, as well as boats allegedly attempting to lay mines in the Strait of Hormuz, the US Central Command (CENTCOM) reported.

Shortly after the airstrikes, Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed it had shot down US drones attempting to enter Iranian airspace, Al Jazeera reported.

“The renewed hostilities came despite the US touting progress toward a peace deal,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

Brent crude’s price has declined as market participants shifted focus from Middle East hostilities threats to optimism over a potential US-Iran peace deal.

“Prices are under pressure from improved sentiment around a potential US‑Iran deal,” two analysts from ING Bank wrote.

Earlier this week, Iran’s parliamentary speaker Mohammad Bagher Ghalibaf and foreign minister Abbas Araghchi traveled to Doha, Qatar, to push negotiations toward a final stage.

Market participants will remain focused on any development in the Middle East conflict until the Strait of Hormuz is completely open to vessel traffic.

By Aparupa Mazumder

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