East of Suez Market Update 9 Mar
Prices in East of Suez ports have risen sharply, and VLSFO availability is tight in Singapore.
IMAGE: Logistics and transportation of container and cargo ships with a crane in Singapore. Getty Images
Changes on the day, to 17.00 SGT (09.00 GMT) today from Friday:
- VLSFO prices up in Singapore ($282/mt), Zhoushan ($193/mt) and Fujairah ($192/mt)
- LSMGO prices up in Singapore ($601/mt), Zhoushan ($322/mt) and Fujairah ($311/mt)
- HSFO prices up in Singapore ($229/mt), Zhoushan ($181/mt) and Fujairah ($162/mt)
Singapore’s VLSFO price has jumped by $282/mt over the weekend, the sharpest increase among the three major Asian bunker hubs. This surge has shifted Singapore’s VLSFO price from near parity with both Fujairah and Zhoushan to notable premiums of $95/mt over Fujairah and $90/mt over Zhoushan.
Since last Monday, Singapore’s VLSFO price has climbed by about $419/mt to reach $990/mt, levels last observed during the May–June 2022 period.
During that period, VLSFO and LSMGO prices in Singapore rose mainly due to the spike in global crude prices following the Russia–Ukraine war, tighter VLSFO supply in Singapore and reduced arbitrage inflows into Asia caused by strong backwardation in fuel oil markets.
The current rally in VLSFO prices is being driven by a combination of factors, including escalating Middle East geopolitical tensions, which have lifted Brent crude prices and disrupted trade flows through the Strait of Hormuz, a key route for global oil shipments.
Tightening availability of the grade has also added upward pressure on price. Recommended lead times for VLSFO in Singapore have extended to around 14 days, up from 7–11 days last week, a source said.
Brent
The front-month ICE Brent contract has spiked by $21.61/bbl on the day from Friday, to trade at $106.80/bbl at 17.00 SGT (09.00 GMT) today.
Upward pressure:
Brent crude’s price has climbed above $100/bbl as the conflict in Iran continues to show no signs of de-escalation.
Oil prices could move higher to as much as $150/bbl if the highly critical Strait of Hormuz remains closed to tankers, Qatar’s Energy Minister Saad al-Kaabi said in an interview with Financial Times.
“Oil prices are surging after Qatar’s Energy Minister has issued dire warnings that is sending shockwaves through global energy markets,” Price Futures Group’s senior market analyst Phil Flynn said.
There is also news that finance ministers from the G7 group of developed countries will discuss a joint release of oil from emergency reserves coordinated by the International Energy Agency (IEA).
“No signs of de-escalation in the war means the market is having to aggressively price in a prolonged supply disruption,” two analysts from ING Bank noted.
Downward pressure:
The total number of rigs drilling for crude oil in the US rose by four 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.
By Tuhin Roy and Aparupa Mazumder
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