East of Suez Market Update 6 Aug

Prices in East of Suez ports have declined, and bunkering at Zhoushan’s anchorages has been suspended today due to bad weather caused by Typhoon Dolphin.

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

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

• VLSFO prices down in Fujairah ($15/mt), Singapore ($12/mt) and Zhoushan ($6/mt)
• LSMGO prices down in Fujairah ($49/mt), Singapore ($20/mt) and Zhoushan ($15/mt)
• HSFO prices down in Fujairah ($6/mt), Singapore ($3/mt) and Zhoushan ($2/mt)

Fujairah’s VLSFO price has fallen by $15/mt over the past day, marking the steepest decline among the three major Asian bunker ports. Despite the drop, Fujairah’s VLSFO remains at an $18/mt premium to Zhoushan, while trading at a $41/mt discount to Singapore.

US-Iran tensions around the Strait of Hormuz continue to tighten bunker fuel supply in Fujairah. VLSFO availability remains constrained and largely unchanged from last week.

In Zhoushan, VLSFO supply remains under pressure despite subdued bunker demand. Recommended lead times have increased to around 12 days, up from about nine days previously.

Meanwhile, bunkering operations at both Zhoushan’s outer and inner anchorages have been suspended today due to adverse weather caused by Typhoon Dolphin, according to a source.

The source added that suppliers remain uncertain about when bunkering operations in Zhoushan will fully resume.

Brent

The front-month ICE Brent contract has lost by $0.80/bbl on the day, to trade at $79.50/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price has felt some upward pressure as the broader Middle East conflict, extending to the Red Sea, escalated.

Yemen’s Iran-aligned Houthi militants have struck multiple cargo ships in the Red Sea this week, causing one vessel to capsize and sink.

The India-flagged oil tanker MSV Faize Noore Oliya drowned off the coast of Yemen in the Red Sea yesterday, after being hit by a projectile.

Threats in the Red Sea persist, despite ongoing diplomatic channels between Washington and Tehran, prompting several tankers carrying Saudi crude to take a U-turn ahead of the Bab al-Mandeb Strait.

Market optimism “was tempered by reports that Houthi militants had targeted a Saudi Arabian oil tanker,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

Brent’s price has slipped below $80/bbl mark as the global oil market awaits a final decision from Iran and Oman, on a draft agreement to reopen the Strait of Hormuz to commercial vessels.

The agreement is in its “final stage,” according to an Iranian official speaking to the Associated Press.

If finalised, the agreement has a potential to reopen the critical waterway – easing some pressure on the world economy.

“Crude oil extended recent losses, as signs of a deal on the reopening of the Strait of Hormuz intensified,” Hynes added.

By Tuhin Roy and Aparupa Mazumder

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