East of Suez Market Update 28 May

Prices in East of Suez ports have moved in mixed directions, and availability of all grades is tight in Fujairah.

IMAGE: Vessel docked at berth in Fujairah, UAE. Port of Fujairah

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

• VLSFO prices up in Fujairah ($29/mt), Singapore ($10/mt) and Zhoushan ($5/mt)
• LSMGO prices up in Fujairah ($11/mt) and Singapore ($5/mt), and down in Zhoushan ($28/mt)
• HSFO prices in up Fujairah ($1/mt), and down in Singapore ($14/mt) and Zhoushan ($1/mt)

VLSFO prices have increased across the three major Asian bunker hubs over the past day, with Fujairah recording the sharpest gains. Fujairah’s VLSFO premiums over Singapore and Zhoushan currently stand at $150/mt and $137/mt, respectively.

“Middle Eastern ports are generally stable at the moment,” a regional source said.

In Fujairah, bunker availability remains tight, with all offers subject to firm enquiry. Demand has fallen sharply as many vessels continue to wait for transit through the Strait of Hormuz. VLSFO and LSMGO supplies in the port “is almost dry,” while HSFO stocks are nearing depletion, according to a trader.

Elsewhere in the UAE, operations at Khor Fakkan, Jebel Ali, Hamriyah and Sharjah are continuing normally, according to Inchcape Shipping. Ports in Ras Al Khaimah also remain fully operational, although RAK Ports introduced a marine risk surcharge in March for vessels calling at its ports, harbours and anchorages.

Brent

The front-month ICE Brent contract has inched up by $0.14/bbl on the day, to trade at $96.41/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Oil prices moved higher after the US military launched fresh strikes in Iran, targeting a military site that officials believed posed a threat to US forces and commercial maritime traffic in the Strait of Hormuz, according to Reuters citing a US official.

“Crude ticks higher as US strikes Iran again,” remarked VANDA Insights founder Vandana Hari.

Iran's Revolutionary Guards said they had targeted a US airbase in response to a US attack in the port city of Bandar Abbas, Reuters reported.

The latest flare-up in the Middle East has added further upward pressure on Brent futures.

Meanwhile, US crude oil inventories fell by 2.8 million bbls in the week ending 22 May, according to estimates from the American Petroleum Institute (API) cited by Trading Economics.

A draw in US crude stocks could signal stronger oil demand and lend additional support to Brent prices.

Downward pressure:

Market focus shifted from concerns over escalating Middle East hostilities to optimism surrounding a potential US-Iran peace deal, putting some downward pressure on oil prices.

“Crude oil prices sold off, as markets became increasingly convinced that a US-Iran deal was imminent,” said ANZ Bank senior commodity strategist Daniel Hynes.

By Tuhin Roy

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