East of Suez Market Update 6 Apr

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

IMAGE: Aerial view of Zhoushan, Zhejiang, China. Getty Images

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

• VLSFO prices up in Zhoushan ($5/mt), and down in Singapore ($20/mt) and Fujairah ($16/mt)
• LSMGO prices up in Fujairah ($51/mt), and down in Zhoushan ($12/mt) and Singapore ($11/mt)
• HSFO prices up in Zhoushan ($19/mt), and down in Fujairah ($46/mt) and Singapore ($3/mt)

Zhoushan’s VLSFO price has edged up by $5/mt over the weekend, while prices in Singapore and Fujairah have declined. Consequently, Zhoushan's benchmark has shifted from price parity with Singapore to a premium of $25/mt, while its premium over Fujairah has widened by $21/mt to $54/mt.

In Zhoushan, availability of all fuel grades has tightened, with most suppliers running low on stocks due to cargo delays, according to a source. Lead times have extended to 7–10 days for VLSFO and 5–10 days for both LSMGO and HSFO. This marks a sharp increase from last week, when lead times across all grades were typically around 3–5 days.

In Taiwan, supply remains largely unaffected by Middle East tensions. However, prices have reacted strongly. A Taiwan-based trader noted that volatility in Brent crude, driven by Middle East tensions, has significantly impacted bunker markets.

Recommended lead times for VLSFO and MGO in Keelung, Taichung, Kaohsiung and Hualien are currently around two days.

Brent

The front-month ICE Brent contract has dropped by $0.96/bbl on the day from Thursday, to trade at $107.89/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude has traded well above $100/bbl in recent days as the Strait of Hormuz remains largely closed to commercial vessel movement.

The global oil market has factored in the risk of missile and drone attacks - targeting commercial vessels, ports and energy infrastructure across the Middle East.

Earlier today, the UAE joined Bahrain’s proposal to the United Nations Security Council (UNSC) to take immediate action to reopen the Strait.

The UNSC is expected to vote this week on a resolution aimed at restoring commercial shipping around the Strait of Hormuz, Reuters reported.

“If Iran maintains effective control [of the Strait of Hormuz], the disruptions in the oil market will only persist,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

Brent crude’s price gains were capped by a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US rose by two to 411 units last week, according to Baker Hughes.

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.

Also putting downward pressure on oil prices, the US and Iran ​have received a plan to reach a ceasefire agreement and reopen the Strait of Hormuz, Reuters reported citing an unnamed source.

The framework has been put together by Pakistan and shared with Tehran and Washington, outlining a two-tier approach with an immediate ceasefire of hostilities, the report added.

“It’s unclear how quickly traffic in the Strait of Hormuz could resume if the US withdraws from the region” Hynes added.

By Tuhin Roy and Aparupa Mazumder

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