East of Suez Market Update 6 July

Bunker fuel prices in East of Suez ports have moved in mixed directions, and VLSFO availability has improved in Fujairah.

IMAGE: Aerial view of Saudi Arabian port of Jeddah with cargo ships and dry docks. Getty Images

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

• VLSFO prices up in Zhoushan ($10/mt), Singapore ($1/mt), and down in Fujairah ($129/mt)
• LSMGO prices up in Zhoushan ($65/mt), Singapore ($11/mt), and down in Fujairah ($20/mt)
• HSFO prices up in Zhoushan ($5/mt), and down in Fujairah ($11/mt), Singapore ($8/mt)
• B30-VLSFO price down in Singapore ($29/mt)

Fujairah’s VLSFO price has fallen by $129/mt over the weekend, marking the biggest decline among the three major Asian bunker hubs. The drop has turned Fujairah’s VLSFO premiums over Singapore and Zhoushan into discounts of $20/mt and $51/mt, respectively.

Meanwhile, Fujairah’s HSFO price has recorded a much smaller decline – narrowing the port’s Hi5 spread from $272/mt on Friday to $154/mt today. At $154/mt, Fujairah’s Hi5 spread remains well below Singapore’s $216/mt and Zhoushan’s $235/mt.

Bunker fuel availability has improved across all major grades in Fujairah, following the signing of a temporary 60-day peace agreement between Iran and the US. Most suppliers in Fujairah can offer prompt VLSFO stems, while HSFO and LSMGO supply remains comparatively tight.

Supply conditions have improved in Khor Fakkan, where VLSFO and HSFO availability has improved. In Saudi Arabia’s Jeddah, prompt VLSFO and LSMGO availability is good.

Brent

The front-month ICE Brent contract has declined by $0.48/bbl on the day from Friday, to trade at $71.62/bbl, at 17.00 SGT (09.00 GMT) today.

Upward pressure:

The global oil market is currently in a wait-and-watch mode amid the US-Iran standoff on a permanent transit protocol through the Strait of Hormuz.

Iran plans to introduce new transit fees for vessels in the Strait of Hormuz, its ambassador to China Abdolreza Rahmani Fazli said on Saturday, adding that Tehran is working with Oman on a new framework covering shipping services and regional supervision.

Fazli further indicated at the World Peace Forum in Beijing that “friendly” countries will receive special treatment, Iranian state media reported.

Notably, the US has consistently rejected Tehran's proposals to impose transit fees or tolls in the Strait of Hormuz, maintaining that the strategic waterway must remain open to passage for global commerce.

Downward pressure:

Brent crude’s price opened the week lower after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to increase oil output again in August.

Seven members of the oil producers’ group have decided to implement a production adjustment of 188,000 b/d next month.

The adjustment will come from the 1.65 million b/d additional voluntary cut announced in April 2023, OPEC said.

The announcement comes amid the temporary peace agreement between Washington and Tehran – a move that is expected to reopen the Strait of Hormuz to commercial vessel traffic and restore global crude oil flows.

By Aparupa Mazumder

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