East of Suez Market Update 7 Aug

Regional bunker benchmarks have risen, and availability of all grades is tight in Zhoushan.

IMAGE: Aerial view Zhoushan City, Zhejiang Province. Getty Images

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

• VLSFO prices up in Zhoushan ($86/mt), Fujairah ($37/mt) and Singapore ($26/mt)
• LSMGO prices up in Zhoushan ($133/mt), Fujairah ($66/mt) and Singapore ($34/mt)
• HSFO prices up in Zhoushan ($57/mt), Singapore ($37/mt) and Fujairah ($28/mt)
• B30-VLSFO price up in Singapore ($49/mt)

Zhoushan’s VLSFO price has surged by $86/mt over the past day, marking the sharpest increase among the three major Asian bunker ports. The rally has erased Zhoushan’s VLSFO discount to Singapore and turned its previous discount to Fujairah into a $31/mt premium.

VLSFO availability in Zhoushan remains tight despite subdued bunker demand. Suppliers are now recommending lead times of around 12 days, up from approximately nine days previously. Lead times for both LSMGO and HSFO have also extended to about 10 days, compared with around seven days earlier.

Bunkering operations at Zhoushan's outer and inner anchorages have been suspended since yesterday due to adverse weather brought by Typhoon Dolphin, according to a source.

Suppliers remain uncertain about when bunkering operations in Zhoushan will fully resume, the source added.

In Hong Kong, bunker market conditions remain largely unchanged, with suppliers continuing to recommend lead times of around seven days for all major fuel grades.

Brent

The front-month ICE Brent contract has gained by $3.53/bbl on the day, to trade at $83.03/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price has climbed back above the $80/bbl threshold as Iran and Oman delay finalising a joint agreement to reopen the Strait of Hormuz to commercial shipping.

Tehran’s parliament is ​reviewing the agreement, that will allegedly bar the US, Israeli and ​other “hostile” vessels from ​transiting the region and impose ​fees of up ​to 20% of a ship’s ‌cargo ⁠value.

Iran wants to charge “service fees rather than a toll,” two analysts from ING Bank noted. “There doesn’t seem to be much of a compromise, which ultimately makes it more difficult to reach a sustainable deal,” they said.

There is also little news of progress made in the ongoing US-Iran negotiations, even as President Donald Trump and other senior US officials claim Washington is close to a ceasefire deal.

“Oil prices are seeing renewed strength amid additional signs that a US-Iran deal remains difficult to achieve,” ING Bank’s analysts added.

Downward pressure:

While there are no active downward pressures on Brent’s price today, market participants are tracking the ongoing Oman-mediated talks between Washington and Tehran.

Moreover, market analysts said if the Iran-Oman agreement to reopen the Strait of Hormuz is finalised, it could ease some pressure on the world economy.

The agreement is in its “final stage,” the Associated Press reported earlier.

By Tuhin Roy and Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online