Europe & Africa Market Update 5 May

Prices of most conventional fuel grades have gained in European and African ports, and prompt fuel supply is tight in the Gibraltar strait.

IMAGE: Aerial view of the Bay of Gibraltar. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($69/mt), Gibraltar ($25/mt) and Rotterdam ($21/mt)
• LSMGO prices up in Durban ($149/mt) and Rotterdam ($20/mt), and down in Gibraltar ($27/mt)
• HSFO prices up in Durban ($85/mt) and Rotterdam ($16/mt), and down in Gibraltar ($5/mt)
• B30-VLSFO prices up in Gibraltar ($24/mt) and Rotterdam ($9/mt)

At Gibraltar, the HSFO price has recorded while its VLSFO price has increased, widening the port’s Hi5 spread by around $30/mt in a single day. This has considerably increased the economic incentive for scrubber-fitted ships to bunker HSFO in the port.

The port’s LSMGO price has also slumped significantly, A lower-priced stem of around 150-500 mt, fixed at $1,417/mt, has weighed down on the price assessment.

Alongside this dip, Rotterdam's LSMGO price has surged. This has narrowed Gibraltar’s LSMGO price premium over Rotterdam by $47/mt in the past day.

Prompt fuel availability remains tight in the Gibraltar strait ports, a trader said. Buyers are advised lead times of between 7-10 days to secure supplies of any fuel grade at competitive prices, the trader added.

Around eight vessels are currently awaiting bunkers in Gibraltar, and some suppliers are delayed by anywhere between 6-24 hours, port agent MH Bland said. In neighbouring Algeciras, some suppliers are delayed by around 12-24 hours on deliveries, the port agent added.

Brent

The front-month ICE Brent contract has gained by $3.09/bbl on the day, to trade at $112.70/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price has moved north of $110/bbl, following a fresh flareup in the Middle East conflict.

Iranian missiles and drones struck the UAE, including Fujairah port – a major Asian bunker hub.

“This port is important for UAE oil exports,” two analysts from ING Bank said. “It is situated outside the Strait of Hormuz, which allowed oil exports to continue… despite the war and blockade of the Strait,” they added.

Separately, two Iranian drones struck MV Barakah – an oil tanker operated by the UAE’s state-owned ADNOC, off Oman’s coast.

“A re-escalation of tensions in the Persian Gulf pushed oil and gas prices higher as the market once again reprices the duration of supply disruptions from the region,” two analysts from ING Bank noted.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US rose by one to 408 units last week.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

By Nachiket Tekawade and Aparupa Mazumder

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