Europe & Africa Market Update 7 Oct

Bunker prices in major European and African ports have risen across the board, and fuel availability is very tight in Durban.

IMAGE: Aerial view of Durban port landscape. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($94/mt), Gibraltar ($24/mt) and Rotterdam ($18/mt)
• LSMGO prices up in Durban ($75/mt), Rotterdam ($22/mt) and Gibraltar ($21/mt)
• HSFO prices up in Rotterdam ($47/mt), Gibraltar ($28/mt) and Durban ($10/mt)

Regional Bunker benchmarks have gained in the past session, tracking Brent’s upward movement.

Durban’s VLSFO price has surged $94/mt in the past session, outpacing the gains of $20/mt each recorded in South Africa’s other major bunkering hubs of Cape Town and Algoa Bay.

Consequently, Durban’s VLSFO price premium over Cape Town and Algoa Bay has surged by $74/mt in the past day to $264/mt and $151/mt respectively.

Durban's VLSFO price also has a $350/mt premium over VLSFO offered off Namibia's Walvis Bay and a $209/mt premium over VLSFO at Port Louis.

Durban’s HSFO price has gained only $10/mt in comparison to the steep rise in the VLSFO price. This has widened the port’s Hi5 spread by $84/mt in the past session to $362/mt.

Bunker availability in Durban remains extremely tight, with buyers advised to book stems around 10-15 days ahead of delivery to get competitive offers, a trader told ENGINE.

Durban is experiencing rough weather. Winds of more than 30 knots and waves higher than 3.5 metres are forecast in the port throughout the afternoon.

Brent

The front-month ICE Brent contract has gained by $2.60/bbl on the day, to trade at $101.60/bbl at 09.00 GMT.

Upward pressure:

Brent crude's price has remained above $100/bbl as supply risks from the Persian Gulf continue to linger amid ongoing attacks on commercial vessels.

"Oil supplies from the Persian Gulf continue to improve. Yet the market is reluctant to get too carried away given that supply risks from the region remain elevated," two analysts from ING Bank noted.

An oil tanker was struck by an unknown projectile within the Persian Gulf on Monday, while attempting an outbound transit, the United Kingdom Maritime Trade Operations (UKMTO) agency reported.

"There is a clear tug-of-war at the moment between improving supply from the region and lingering threats to supply," ING Bank's analysts said.

Downward pressure:

Brent's gains were capped as Persian Gulf crude output showed signs of recovery, with regional operators adapting to the shifting geopolitical landscape.

Kuwait is reportedly producing at 75% of pre-war levels, Bloomberg reported, citing Kuwait Petroleum Corporation (KPC) chief executive Sheikh Nawaf Saud Al-Sabah.

Saudi Arabia has also reduced the official selling price (OSP) of the Arab Light to Asia for November loadings, Reuters reported.

"Iraq is hiring additional vessels to send oil through Hormuz", a sign of an improving supply conditions, ANZ Bank's senior commodity strategist Daniel Hynes said.

By Nachiket Tekawade and Aparupa Mazumder

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