East of Suez Market Update 5 June

Most prices in East of Suez ports have moved down, and VLSFO availability 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 up in Fujairah ($22/mt), and down in Singapore ($17/mt) and Zhoushan ($15/mt)
• LSMGO prices up in Fujairah ($1/mt), and down in Zhoushan ($21/mt) and Singapore ($16/mt)
• HSFO prices down in Fujairah ($19/mt), Zhoushan ($10/mt) and Singapore ($7/mt)
• B30-VLSFO price down in Singapore ($6/mt)

Fujairah’s VLSFO price has climbed by $22/mt for a third consecutive day, while VLSFO prices in Zhoushan and Singapore have declined for a second straight day. This has widened Fujairah’s VLSFO premiums over the two Asian hubs to $293/mt against Singapore and $303/mt against Zhoushan.

In the LSMGO segment, prices in Zhoushan and Singapore have fallen by $21/mt and $16/mt, respectively, over the past day, whereas Fujairah’s price has remained largely unchanged. Zhoushan’s LSMGO is currently trading at a premium of $27/mt to Singapore but at a substantial discount of $428/mt compared with Fujairah.

VLSFO supply in Zhoushan continues to face constraints, with several suppliers still dealing with limited inventories. According to a trader, the tight supply situation has persisted for around a month, with recommended lead times remaining at 7–10 days. Availability of both LSMGO and HSFO has improved slightly, with lead times easing to 4–7 days from 5–8 days last week.

As May-June is typically associated with extended periods of dense fog in Zhoushan, often affecting cargo handling and bunkering activities, one supplier has updated its bunker-only-call cancellation policy. Under the revised policy, which took effect on 26 May, dense fog is no longer considered a force majeure event.

The supplier will make efforts to arrange bunker deliveries once a vessel arrives, although supply cannot be guaranteed. Vessels may still incur cancellation charges, while those choosing to skip Zhoushan can apply for replacement orders subject to mutual agreement, a source said.

Brent

The front-month ICE Brent contract has declined by $1.58/bbl on the day, to trade at $95.00/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price has felt some upward pressure as Iran said there has been “no tangible progress” in the ongoing negotiations with the US on a lasting ceasefire agreement that can ultimately reopen the Strait of Hormuz.

“No tangible progress has been achieved in the negotiation process,” Bloomberg quoted Iran’s foreign minister Abbas Araghchi as saying.

Despite Pakistan-mediated negotiations between Washington and Tehran to end hostilities, oil market analysts are sceptical as concrete details remain elusive.

“These on-again, off-again developments keep the market on edge,” Price Futures Group’s senior market analyst Phil Flynn said. “We’ll keep watching for actual implementation on the ground,” he added.

Downward pressure:

Brent’s price is on track to close the week with a decline following the US-brokered truce deal between Israel and Lebanon earlier this week.

Under the agreement, Tel Aviv and Beirut will immediately cease all regional hostilities.

Market analysts view this progress as a potential bridge to a comprehensive agreement with Tehran - a move essential to reopening the Strait of Hormuz.

“The oil market continues to trade on expectations of an imminent resumption in energy flows from the Persian Gulf,” two analysts from ING Bank noted.

By Tuhin Roy and Aparupa Mazumder

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