Europe & Africa Market Update 16 June

Bunker prices across major European and African ports have dropped, while prompt fuel availability remains tight in the ARA.

IMAGE: The Europoort area in the Port of Rotterdam. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Durban ($82/mt), Gibraltar ($19/mt) and Rotterdam ($3/mt)
• LSMGO prices up in Durban ($19/mt), and down in Gibraltar ($22/mt) and Rotterdam ($8/mt)
• HSFO prices up in Gibraltar ($2/mt), and down in Rotterdam ($20/mt)
• B30-VLSFO prices up in Rotterdam ($8/mt)

Bunker benchmarks have mostly dropped over the past day, in line with Brent’s price.

However, with Gibraltar’s HSFO price edging up and the port’s VLSFO price having fallen considerably, the port’s Hi5 spread has narrowed by $21/mt, to $86/mt.

Conversely, the Hi5 spread at Rotterdam has widened by $17/mt since yesterday, to $70/mt today, after the port's HSFO price recorded a steeper fall than its VLSFO price.

In the ARA bunkering hub, availability of VLSFO and HSFO is tight for prompt deliveries, with buyers recommended lead times of around 7-8 days, a trader said. LSMGO supplies are available within six days, the trader added.

Brent

The front-month ICE Brent contract has declined by $1.6/bbl on the day, to trade at $81.22/bbl at 09.00 GMT.

Upward pressure:

Market participants are still analysing the viability of the US-Iran peace deal.

Brent futures has gained some support amid concerns that the resumption of normal shipping traffic through the Strait of Hormuz, and a recovery in oil supplies, will not be immediate.

“This is an important juncture in the Middle East conflict. However, any recovery of oil supplies will likely take months. Shipping companies will need assurances that the key waterway is free of mines before they resume transits on a large scale,” ANZ Bank’s senior market strategist Daniel Hynes said.

Crude oil inventories in the US Strategic Petroleum Reserve have fallen to around 340 million bbls, their lowest level since 1983. Stocks have fallen sharply following continued drawdowns under the US commitment to supply 172 million bbls to the International Energy Agency’s (IEA) coordinated effort to stabilise global oil supplies amid the Middle East conflict, two analysts from ING Bank said.

Downward pressure:

Brent crude’s price has declined amid growing optimism over the reopening of the Strait of Hormuz after US President Donald Trump announced a preliminary peace deal with Iran.

Iran’s Foreign Minister Abbas Araqchi said on Tuesday that the two sides would discuss the details of the agreement in Switzerland on Friday to reach a final deal, Reuters reported.

“Crude oil prices slumped after the US and Iran announced they had reached a deal to end the Middle East conflict. The two sides are set to sign the memorandum of understanding in Switzerland on Friday,” Hynes said.

The final text of the agreement is expected to be released in the coming days.

By Nachiket Tekawade and Shilpa Sharma

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