Europe & Africa Market Update 29 May

Bunker prices across European and African ports have mostly declined, and prompt deliveries are tight in Scandinavian locations.

IMAGE: Aerial view of Port of Gothenburg. Gothenburg Port Authority

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Durban ($50/mt), Rotterdam ($27/mt) and Gibraltar ($22/mt)
• LSMGO prices up in Durban ($217/mt), and down in Gibraltar ($40/mt) and Rotterdam ($26/mt)
• HSFO prices down in Gibraltar ($16/mt) and Rotterdam ($12/mt)
• B30-VLSFO up in Rotterdam ($1/mt)

Bunker benchmarks have tracked Brent's dip over the past session.

LSMGO offered off Denmark’s Skaw has declined around $91/mt in the past day, more sharply than the dip in Rotterdam’s LSMGO price.

A 150-500 mt LSMGO stem, fixed at a low price of $1,059/mt, has put additional downward pressure on the Scandinavian offshore anchorage's LSMGO benchmark.

This has narrowed off Skaw’s price premium over Rotterdam by $65/mt in the past day.

Fuel availability off Skaw and in Sweden’s Gothenburg is tight for prompt deliveries, and buyers are advised to book stems with lead times of around 10 days, a trader told ENGINE.

Rough winds of more the 25 knots are forecast in the locations on 30 May, which could complicate deliveries and cause congestion over the weekend.

Brent

The front-month ICE Brent contract has fallen by $2.90/bbl on the day, to trade at $93.51/bbl at 09.00 GMT.

Upward pressure:

Concerns over whether the ceasefire between the US and Iran will hold, following fresh US military strikes, have limited Brent’s decline.

“Crude oil prices rallied early in the session amid renewed skirmishes in the Middle East,” said ANZ Bank senior commodity strategist Daniel Hynes.

A closure of the Strait of Hormuz and escalating geopolitical tensions in the Middle East could push Brent prices as high as $200/bbl by the end of 2026, analysts at energy firm Wood Mackenzie estimate.

“Oil prices could reach US$200/bbl [by end of 2026] in a worst-case scenario, as more than 11 million b/d of Gulf crude and condensate supply remains curtailed,” the Wood Mackenzie report said.

Meanwhile, commercial US crude oil inventories fell by 3.3 million bbls to 441.7 million bbls in the week ending 22 May, according to the US Energy Information Administration’s (EIA) weekly oil inventory report, adding some upward pressure to prices.

Downward pressure:

Reports that the US and Iran have reached an agreement on a potential ceasefire extension have added downward pressure on oil prices.

The US and Iran agreed on Thursday to extend the ceasefire and lift restrictions on shipping through the Strait of Hormuz, according to Reuters citing sources.

“Washington nearing deal to extend Iran ceasefire, reopen Hormuz,” remarked VANDA Insights founder Vandana Hari.

“The oil market continues to edge lower amid growing optimism that the US and Iran are moving toward a deal,” two analysts from ING Bank said.

By Nachiket Tekawade and Tuhin Roy

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