Europe & Africa Market Update 27 July

Bunker prices across Europe and Africa have dropped, while congestion at Gibraltar persists.

Changes on the day from Friday to 09.00 GMT today:

• VLSFO prices down in Gibraltar ($101/mt), Durban ($89/mt) and Rotterdam ($68/mt)
• LSMGO prices down in Durban ($235/mt), Gibraltar ($157/mt) and Rotterdam ($130/mt)
• HSFO prices down in Durban ($80/mt), Rotterdam ($62/mt) and Gibraltar ($51/mt)
• B30-VLSFO prices down in Gibraltar ($74/mt) and Rotterdam ($68/mt)

Bunker fuel prices have fallen significantly over the weekend, tracking the slump in Brent.

In Gibraltar, the VLSFO price has fallen almost twice than the port's HSFO price. A 500-1,500/mt stem, fixed at a low price of $698/mt, has put additional downward pressure on the benchmark.

These price movements have narrowed the port's Hi5 spread by $50/mt, to $105/mt, over the past day. However, compared to two months ago, the Hi5 spread has more than doubled, from $50/mt on 27 May.

A widening Hi5 spread improves the economic benefit for scrubber-fitted ships to bunker HSFO in the port.

Congestion persists at the Gibraltar port, with around 20 vessels currently awaiting bunkers due to lack of space, port agent MH Bland said. Suppliers in both, Gibraltar and Algeciras, are delayed by up to a day on deliveries, the port agent added.

Fuel availability remains tight in the Gibraltar Strait ports, with buyers advised lead times of more than a week to secure supplies of any fuel grade, a trader said.

Brent

The front-month ICE Brent contract has declined by $8.47/bbl on the day from Friday, to trade at $89.21/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price is trading close to $90/bbl as market participants continue to monitor the situation in the Middle East.

Over the weekend, the US Central Command (CENTCOM) disabled another vessel in the Gulf of Oman, after its crew allegedly attempted to violate the blockade, it said.

The Mozambique-flagged M/T Lavine is no longer transiting to Iran after being disabled by US forces. The action marks the second commercial ship disabled by the US CENTCOM in recent weeks.

Downward pressure:

Brent’s price has plummeted from the previous week’s highs after Washington paused strikes on Iranian targets, raising hopes of a truce between the two countries.

“Oil prices fell sharply… as the US and Iran refrained from further military action, offering the first tangible signs of a potential de-escalation in tensions,” two analysts from ING Bank noted.

Oil market participants are seeing the weekend’s de-escalation as a temporary move, after the US struck Iran for 13 consecutive days.

The decline in Brent’s price reflects the oil market's “desperation for positive news,” ING Bank’s analysts said.

The pause is expected to give “diplomacy some space”, US Ambassador to the United Nations Mike Waltz said in an interview with CBS News, adding that military assets were still deployed in the region, should diplomacy fail.

By Nachiket Tekawade and Aparupa Mazumder

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