Europe & Africa Market Update 1 Apr

Bunker benchmarks have mostly fallen in major European and African hubs, while bunker demand is increasing in African ports.

IMAGE: Cargo ship docked in the port of Walvis Bay, Namibia. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Port Elizabeth ($151/mt), Algeciras ($119/mt) and Rotterdam ($68/mt)
• LSMGO prices down in Algeciras ($206/mt) and Rotterdam ($169/mt)
• HSFO prices down in Rotterdam ($65/mt)
• B30-VLSFO prices down in Algeciras ($98/mt) and Rotterdam ($91/mt)

Algeciras’ VLSFO price has fallen more steeply than Rotterdam's. Consequently, the Spanish port’s VLSFO price premium over the Dutch port has narrowed by around $51/mt in the past day.

VSLFO prices have slumped off Namibia’s Walvis Bay over the past day. Conversely, Lome’s VLSFO price has edged higher.

The Togolese port now has a $126/mt price premium over the VLSFO offered off Walvis Bay, compared to a modest $19/mt discount seen yesterday.

Buyers looking to bunker VLSFO in both the West African locations are recommended a lead time of around 10-11 days to avoid paying large premiums, a trader told ENGINE.

Suppliers and traders have seen high demand for bunkers in West African ports, as ships re-routing around the Cape of Good Hope look for alternative bunkering locations. The high demand has increased lead times in many ports.

A supplier in Angola’s Luanda said they were not offering VLSFO at the moment, while a supplier in Nigeria’s Lagos anchorage said they can offer VLSFO with lead time of around 10 days.

Brent

The front-month ICE Brent contract has declined by $9.98/bbl on the day, to trade at $102.62/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has remained well-supported by the latest developments in the Middle East war.

Overnight, an ​oil tanker – leased to Qatar’s state-owned energy firm QatarEnergy – was hit by an Iranian missile, while sailing in Qatari waters, Reuters reported citing the country’s defence ​ministry.

Two of the three Iranian missiles targeting ⁠Qatar were intercepted, while one hit ​the Aqua 1 oil tanker, the report added. The vessel was located 17 nautical miles north of Qatar's Ras Laffan port, the United Kingdom Maritime Trade Operations (UKMTO) said.

“Brent crude gained in early trading after reports of another attack on an oil tanker,” ANZ Bank’s senior commodity strategist Daniel Hynes said. “This signalled a deepening Middle East conflict that shows little sign of nearing a resolution,” he added.

The effective closure of the Strait of Hormuz due to the conflict has started impacting global economies, according to government reports.

“The conflict, which is now in its fifth week, has caused extensive infrastructure damage,” Hynes said.

Downward pressure:

Brent crude’s price has declined following a significant build-up in US crude stocks.

US crude oil inventories rose by 10.3 million bbls in the week ending 27 March, according to estimates from the American Petroleum Institute (API), cited by Trading Economics.

The crude stock build was “far above expectations for a 1.3mb [1.3 million b/d] build,” two analysts from ING Bank said.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

By Nachiket Tekawade and Aparupa Mazumder

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