East of Suez Market Update 5 May

Regional bunker prices have risen tracking Brent, while supply of all grades remains tight in Zhoushan.

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 Zhoushan ($60/mt), Singapore ($25/mt) and Fujairah ($23/mt)
• LSMGO prices up in Zhoushan ($126/mt), Fujairah ($25/mt) and Singapore ($4/mt)
• HSFO prices up in Zhoushan ($34/mt), Singapore ($13/mt) and unchanged in Fujairah
• B30-VLSFO price up in Singapore ($24/mt)

Bunker prices across all grades have risen sharply in Zhoushan over the past day. The port’s VLSFO benchmark has increased more than HSFO, widening Zhoushan’s Hi5 spread by $26/mt to $108/mt.

At $108/mt, Zhoushan’s Hi5 spread remains below Singapore’s $116/mt and Fujairah’s $208/mt.

Securing prompt bunker supply in Zhoushan can be difficult. Recommended lead times for VLSFO stand at 8-10 days, while LSMGO and HSFO deliveries require 6-9 days.

VLSFO and LSMGO prices have risen in Fujairah in the past day, while its HSFO benchmark has remained unchanged.

Yesterday, Iranian missiles and drones struck the UAE, including Fujairah port, according to reports. The Fujairah Oil Industry Zone was hit by a drone, but the scale of the damage is still uncertain, a trader told ENGINE.

Brent

The front-month ICE Brent contract has gained by $3.09/bbl on the day, to trade at $112.70/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has moved north of $110/bbl, following a fresh flareup in the Middle East conflict.

Iranian missiles and drones struck the UAE, including Fujairah port – a major Asian bunker hub.

“This port is important for UAE oil exports,” two analysts from ING Bank said. “It is situated outside the Strait of Hormuz, which allowed oil exports to continue… despite the war and blockade of the Strait,” they added.

Separately, two Iranian drones struck MV Barakah – an oil tanker operated by the UAE’s state-owned ADNOC, off Oman’s coast.

“A re-escalation of tensions in the Persian Gulf pushed oil and gas prices higher as the market once again reprices the duration of supply disruptions from the region,” two analysts from ING Bank noted.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US rose by one to 408 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 Shilpa Sharma and Aparupa Mazumder

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