Europe & Africa Market Update 21 July

European and African bunker benchmarks have mostly moved higher, and fuel availability is tight for prompt deliveries off Malta.

IMAGE: Tankers during a bunker operation off Malta. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Rotterdam ($14/mt), Gibraltar ($9/mt) and Durban ($5/mt)
• LSMGO prices up in Durban ($61/mt), Rotterdam ($30/mt) and Gibraltar ($20/mt)
• HSFO prices up in Rotterdam ($22/mt), Gibraltar and Durban ($16/mt)
• B30-VLSFO prices down in Rotterdam ($18/mt)

Conventional bunker fuel prices in the major regional ports have recorded gains over the past session, tracking the rise in Brent.

However, the price of LSMGO off Malta has edged down by $3/mt. A 50-150 mt LSMGO stem, fixed at a low price of $1,261/mt, may have put downward pressure on the benchmark.

Consequently, Malta’s LSMGO price is now almost at par with Gibraltar’s, compared to a $24/mt price premium observed yesterday.

Fuel availability is tight off Malta for prompt deliveries, with longer lead times of between 5-7 days recommended for deliveries of any fuel grade, a trader said.

Rough winds of more than 25 knots are forecast in the port between 22-24 July, which could cause temporary disruptions in the port.

Brent

The front-month ICE Brent contract has gained by $0.56/bbl on the day, to trade at $88.78/bbl at 09.00 GMT.

Upward pressure:

Yemen’s Iran-backed Houthi militant group has declared a naval blockade on Saudi Arabia, escalating the US-Iran conflict directly to the Red Sea and pushing Brent’s price higher.

Riyadh is highly dependent on the route, transporting about 70% of its crude through the Red Sea port of Yanbu to circumvent the Strait of Hormuz.

“Since disruptions hit the Persian Gulf, the Saudis have increased exports from Yanbu in the Red Sea, shipping around 4.6m b/d [4.6 million b/d] of crude in June, up from around 1.3m b/d [1.3 million b/d] at the start of the year,” two analysts from ING Bank said.

The announcement comes shortly after Iran instructed the Houthis to prepare to close the Bab al-Mandeb Strait connecting the Red Sea to the Gulf of Aden.

“An effective blockade would prevent oil flows to Asia… vessels would have to take the much longer route through the Suez Canal and go around Africa,” ING Bank’s analysts added.

Downward pressure:

Reports about some efforts to ease the situation in the Middle East has put some downward pressure on Brent’s price today.

Mediators ​have proposed a 10-day ceasefire plan to ​de-escalate ​the US-Iran conflict, in a bid ​to ​ ‌revive ⁠the interim deal reached ​in June, ⁠Reuters reported citing a senior Iranian ​official.

The oil market is yet to see a meaningful easing of tensions, ING Bank’s analysts noted. “This won’t be an easy task. Large divisions remain between the US and Iran,” they added.

By Nachiket Tekawade and Aparupa Mazumder

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