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Integr8: Geopolitics have a huge bearing on our market, but something different is happening in HSFO bunker pricing

Firm discusses the impact of the extreme events unfolding in Middle East, weaker economic indications for China and Europe and causes of huge spread between VLSFO and HSFO, amongst others.

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By Steve Christy, Research Contributor, Integr8 Fuels
[email protected]       

26 October 2023

We are in a global, geopolitical market

It is often said that the more dramatic movements in oil prices are usually driven by world events, and that the bunker market is no different to any other part of the crude and products markets.

This is exactly what has happened in October. Crude prices were falling in the first week of the month on the back of weaker economic indications for China and Europe. Even though Saudi Arabia and Russia stated they would maintain their voluntary production cutbacks through to the end of the year, this had little impact on the market and oil prices continued their bearish slide.

Over this first week of October Brent futures were down $7/bbl, Singapore VLSFO down $50/mt and Rotterdam VLSFO down by almost $40/mt.

Shortly thereafter, the extreme events in the Middle East took hold. Oil prices rebounded with the news, wiping out the declines seen in the previous week; Brent futures moved back up to the low $90s, Singapore VLSFO returned to around $680/mt, and Rotterdam VLSFO hit $625/mt.

These “down and up” price developments and the close relationship between Brent crude and VLSFO are shown clearly in the chart below.

Graph 1 1024x666 1

Prices have eased at the time of writing, as people wait to see where the Middle East conflict goes and weaker economic indicators out of Europe come to the forefront.

Crude price direction is usually a very good guide for VLSFO

Putting some longer-term context into the Singapore VLSFO versus Brent relationship, the chart below illustrates monthly average price developments for these two commodities so far this year. It shows their very strong correlation and the range in pricing. When Brent crude was around $75/bbl, Singapore VLSFO was close to $575/mt. With recent crude prices rising to their highest levels so far this year and Brent in the low $90s, so monthly average Singapore VLSFO prices are at $660/mt and almost $100/mt above their mid-year lows.

Graph 2 1024x664 1

In the near term, a lot of the movement in crude oil prices will be linked to what is happening in the Middle East, and so VLSFO price direction will be derived from these events. However, there are still nuances within the bunker market that we continue to monitor, not least the differences between VLSFO and HSFO.

In complete contrast to VLSFO, average prices for HSFO have fallen!

Unlike VLSFO prices closely tracking crude and moving higher over recent months, there has been a turning point in the HSFO market and prices have actually fallen. Whereas monthly average Singapore VLSFO prices are now $30/mt higher than in August, Singapore HSFO prices are $70/mt lower!

Graph 3 1024x667 1

VLSFO and HSFO go in different directions

From the initial analysis, Singapore VLSFO closely tracks crude, so it is no surprise that the price relationship between these two are consistent. In fact, Singapore VLSFO is priced at close to 100% of Brent (on a weight basis) and this year has only varied within a very narrow range of 95-103%. If you go back three years, the relationship has been consistently tight and VLSFO has been within the 95-108% range of Brent in all but three months.

Graph 4 1024x646 1

This is in complete contrast to HSFO pricing versus crude. Taking Singapore HSFO as a benchmark, its percentage of Brent shifted from around 65% at the start of the year to close to 80% by mid-year. It is no surprise that the HSFO/Brent relationship strengthened even further in July and August to close to 90%, as Saudi Arabia and Russia made additional, voluntary cuts in crude production/exports totalling 1.5 million b/d (all of which are medium and heavy grades). Consequently, HSFO supply was always going to be squeezed and its relative price likely to rise.

With statements that the Saudi (and Russian) production cuts would run through to the end of this year, it might have been the case that HSFO prices would continue to be supported, at least going into the fourth quarter. This hasn’t happened, and HSFO prices have already fallen sharply despite the Saudi Arabia and Russia strategy and heightened geopolitical risks in the Middle East.

Why has HSFO fallen relative to Brent?

HSFO pricing was always expected to weaken versus Brent, not least in anticipation of the rise in Saudi and Russian crude exports from January. However, the shift has been ‘early’ and the key trigger for the turnaround has centred on the Middle East and a recent substantial increase in HSFO exports.

HSFO is used in a number of power-generating plants in the Middle East and demand is high in the region during the summer months to meet air conditioning demand. As temperatures eased in October, ‘local’ demand for HSFO fell back. Consequently, HSFO exports from the UAE moved from virtually nothing in September, to indications of around 3 million bbls going to Singapore in the middle two weeks of October. On this basis we could expect the seasonal pattern of continued HSFO exports from the UAE until power-generating demand increases again Q2 next year.

In addition to this seasonal shift, there has also been a structural change in HSFO exports from Kuwait. Like the UAE, Kuwait has been burning HSFO in its power generating sector, with supplies coming from their domestic refineries as well as imported volumes. However, with the phased introduction of the massive, 615,000 b/d Al Zour refinery from late last year, it was always planned that the country would switch to using lower sulphur fuel oil as part of its Environmental Fuel Project (EFP). This is now in place and the agreement is for Al Zour to supply up to 225,000 b/d of low-sulphur material to the Kuwait Ministry of Electricity as part of their cleaner energy program.

This has therefore ‘freed-up’ Kuwaiti HSFO for export and also removed them as a buyer of HSFO from the international market on a permanent basis. These ‘additional’ HSFO volumes are moving to Asia and are another contributing factor to a weakening HSFO price.

It all means a widening VLSFO – HSFO price differential

Looking at the VLSFO and HSFO markets, it is clear the price spread between the two products has widened. With ‘incremental’ HSFO volumes available in the Middle East and moving into Singapore, the widening has been greater in these two bunker regions.

This has meant the VLSFO – HSFO spread in Singapore has shifted from an extreme low of only $80/mt in July and August to an average of $180/mt in October. This is still not back to levels seen at the start of this year, but the advantages for scrubber-fitted ships are clearly far better than they have been since March.

Graph 5 1024x569 1

The price spread in Fujairah is very close to the Singapore differential, at around $175/mt in October. However, since the Russian invasion of Ukraine and the resulting ban on Russian products entering Europe (halting a substantial flow of HSFO), the VLSFO – HSFO price spread in Europe has typically been far smaller than in the Middle East and Asia. So, although the spread in Europe has widened, in Rotterdam it has only moved out to $80/mt in October, $100/mt less than in Singapore!

What next?

With the shifts in the HSFO pricing and additional heavier crudes expected to enter the market from the start of next year as Saudi Arabia and Russia remove their voluntary production cutbacks, we can expect ongoing relative downwards pressures on HSFO prices. In the near term, it remains to see what the geopolitical risk is on crude prices, which in turn will largely determine VLSFO pricing. Now the VLSFO – HSFO spread is far more attractive for owners of scrubber-fitted ships in the Middle East and Asia.

Photo credit and source: Integr8
Published: 31 October, 2023

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Bunker Fuel Availability

ENGINE: Europe & Africa Bunker Fuel Availability Outlook (16 Apr 2025)

HSFO and VLSFO supply normal in the ARA; bunker supply improves in Gibraltar; VLSFO supply remains tight in Durban.

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RESIZED ENGINE Europe and Africa

The following article regarding Europe and Africa bunker fuel availability has been provided by online marine fuel procurement platform ENGINE for post on Singapore bunkering publication Manifold Times:

  • HSFO and VLSFO supply normal in the ARA
  • Bunker supply improves in Gibraltar
  • VLSFO supply remains tight in Durban

Northwestern Europe

HSFO and LSMGO supplies in the ARA are normal, while VLSFO supply remains tight, a trader told ENGINE. However, securing very prompt delivery of HSFO can be difficult in the hub, with recommended lead times of 8-10 days. Lead times of 3-5 days are advised for LSMGO and VLSFO requires up to seven days.

The ARA’s independently held fuel oil stocks are down by 9% so far this month compared to March, according to Insights Global data. At 6.63 million bbls, the region’s fuel oil stocks are at their lowest so far this year.

The region has imported 269,000 b/d of fuel oil so far this month, an increase from 198,000 b/d of fuel oil imported in March, according to data from cargo tracker Vortexa.

Mexico (30% of the total) has emerged as the region’s topmost import source, followed by Estonia (23%), the US (15%), the UK (12%), France and Poland (8% each), Denmark (4%) and Finland (1%).

The region’s independent gasoil inventories - which include diesel and heating oil – have averaged 5% lower in April thus far. The ARA hub has imported 172,000 b/d of gasoil and diesel so far this month, marking a steep decline from 346,000 b/d imported in March, according to Vortexa data.

Prompt bunker supply is good in Germany’s Hamburg port, a trader said. All bunker grades require lead times of 3-5 days, consistent with the past last few months.

Mediterranean

Bunker supply in the Gibraltar Strait has improved now, after remaining tight for prompt deliveries last week. Lead times of 4-8 days are recommended for all three grades.

After multiple days of adverse weather conditions, Gibraltar, Algeciras and Ceuta are now fully operational. Conducive weather is forecast in Gibraltar until Friday. However, strong winds are expected to hit the port on Saturday and Sunday, which could complicate deliveries.

Similar to last week, prompt supply is tight in the port of Las Palmas, a trader said. Lead times of 12-14 days are advised for all three grades. 

Bunker supply is stable in other Mediterranean ports, including Istanbul, Piraeus and Malta Offshore, a trader told ENGINE.

In Turkey's Istanbul, prompt availability is good for all three grades. Lead times of 3-5 days are recommended for deliveries there.

In the Greek port of Piraeus, securing bunker deliveries during the Easter weekend can be difficult, as barge operations will be suspended between 19-20 April, a source said.

Malta Offshore has good bunker supply with prompt delivery dates available, a trader said.

Africa

VLSFO supply remains tight in the South African ports of Durban and Richards Bay, with lead times of 7-10 days advised for the grade in both ports, according to a trader.

Durban's LSMGO supply still remains dry, a trader said. The grade has been dry since the last week of January, when suppliers ran out of LSMGO stock.

Port Louis continues to have normal bunker availability. Prompt deliveries with lead times of 5-7 days are possible for VLSFO and LSMGO, while HSFO requires 7-10 days .

By Samantha Shaji

 

Photo credit and source: ENGINE
Published: 17 April, 2025

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Bunker Fuel

Panama bunker fuel sales up by 27.7% on year in March 2025

Total bunker sales at Panama was 498,814 mt in March 2025, compared to sales of 390,678 mt during the similar period in 2024, according to latest PMA data.

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RESIZED Panama

Bunker fuel sales at Panama increased by about 27.7% in March 2025, according to the latest data from La Autoridad Maritima de Panama, also known as the Panama Maritime Authority (PMA).

Total bunker sales at Panama was 498,814 metric tonnes (mt) in March 2025, compared to sales of 390,678 mt during the similar period in 2024.

In March 2025, the Pacific side of Panama posted bunker sales of 422,034 mt; 250,364 mt of VLSFO, 129,968 mt of RMG 380, 5,410 of marine gas oil (MGO), and 36,292 mt of low sulphur marine gas oil (LSMGO) were delivered.

The similar region saw total marine sales of 329,076 mt a year before in March; with VLSFO sales at 191,038 mt, RMG 380 sales at 106,059 mt, MGO sales at 10,270 mt, and 21,709 mt of LSMGO being sold.

Panama’s Atlantic side, meanwhile, recorded total bunker fuel sales of 76,780 during March 2025; the figure comprised 56,388 mt of VLSFO, 6,604 mt of RMG 380, 2,582 mt of MGO, and 11,206 mt of LSMGO.

It saw total sales of 61,602 mt in March a year before; with VLSFO sales of 43,294 mt, RMG 380 sales of 8,170 mt, 3,972 mt of MGO, and LSMGO sales of 6,166 mt.

 

Photo credit: jhernandezb05 from Pixabay
Published: 16 April, 2025

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Bunker Fuel Availability

ENGINE: East of Suez Bunker Fuel Availability Outlook (15 Apr 2025)

VLSFO availability is tight in Singapore; bunker demand low in Fujairah; prompt HSFO supply is tight across several Japanese ports.

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RESIZED ENGINE East of Suez

The following article regarding regional bunker fuel availability outlook for the East of Suez region has been provided by online marine fuels procurement platform ENGINE for publication on Singapore bunkering publication Manifold Times:

  • VLSFO availability is tight in Singapore
  • Bunker demand low in Fujairah
  • Prompt HSFO supply is tight across several Japanese ports

Singapore and Malaysia

VLSFO lead times in Singapore have widened to 8–12 days, up from 7–10 days last week. In contrast, HSFO lead times have shortened to 5–9 days, compared to the previous 7–11 days. LSMGO availability remains steady, with recommended lead times ranging from 2-7 days.

According to the latest data from Enterprise Singapore, the port’s residual fuel oil stocks have averaged 15% higher so far this month than in March. Fuel oil imports have surged by 29%, increasing by 1.64 million bbls. This rise has far outpaced the 432,000-bbl increase in exports, resulting in a notable buildup of stock levels. On the other hand, middle distillate inventories at the port have dropped by 9% this month to 9.35 million bbls—the lowest level since January.

At Malaysia’s Port Klang, VLSFO and LSMGO remain readily available, with prompt deliveries possible for smaller volumes. However, HSFO supply continues to be limited.

East Asia

Availability has improved across all grades in Zhoushan, where most suppliers now recommend lead times of 4–6 days, down from 5–7 days previously.

In northern China, Dalian and Qingdao have healthy stocks of VLSFO and LSMGO, although HSFO remains limited in Qingdao. Tight supply conditions persist in Tianjin for both VLSFO and HSFO, while LSMGO availability remains steady.

In Shanghai, VLSFO and HSFO are also under supply pressure, but LSMGO continues to be readily available. Further south, Fuzhou has strong availability of both VLSFO and LSMGO. Xiamen has good VLSFO supply but limited LSMGO.

Prompt deliveries of VLSFO and LSMGO remain difficult to secure in Yangpu and Guangzhou.

In Hong Kong, lead times for all fuel grades remain stable at around seven days, unchanged from recent weeks.

In Taiwan, VLSFO and LSMGO supplies remain stable in Hualien and Keelung, with lead times holding steady at around two days, the same as last week. In Kaohsiung and Taichung, deliveries of both grades require lead times of approximately three days.

Lead times for all fuel grades at several South Korean ports have shortened from 3–10 days last week to 3–6 days currently.

However, bunker operations are expected to face disruptions due to high waves and strong winds in Ulsan, Onsan, and Busan from 16–21 April, in Daesan and Taean from 16–19 April, and in Yeosu from 19–21 April.

Prompt VLSFO supply remains tight across several Japanese ports, including Tokyo, Chiba, Yokohama, Kawasaki, Osaka, Kobe, Sakai, Nagoya, Yokkaichi and Mizushima.

LSMGO availability is generally stable, although prompt deliveries can be difficult to secure in Osaka, Kobe, Sakai, Nagoya, Yokkaichi and Mizushima. Similarly, prompt HSFO supply remains constrained across many Japanese ports. In Oita, availability of all fuel grades is subject to enquiry.

Oceania

In Western Australia, Kwinana, Fremantle, and Kembla have strong supplies of VLSFO and LSMGO, with recommended lead times of 7–8 days. In New South Wales, Sydney has ample LSMGO availability, though securing prompt HSFO deliveries remains challenging.

In Victoria, both Melbourne and Geelong report abundant VLSFO and LSMGO stocks, but prompt HSFO stems are difficult to obtain. Queensland ports—Brisbane and Gladstone—also maintain sufficient VLSFO and LSMGO supplies, with lead times of 7–8 days. However, HSFO availability in Brisbane remains limited.

In New Zealand, Tauranga and Auckland have adequate VLSFO stocks, and suppliers in Auckland can provide prompt LSMGO deliveries. Bunker operations in Tauranga, however, may face intermittent disruptions due to rough weather expected throughout the week.

South Asia

VLSFO continues to be in tight supply at several Indian ports—Mundra, Kandla, Mumbai, Tuticorin, Chennai, Visakhapatnam, Cochin, and Haldia—reflecting conditions seen in recent weeks. LSMGO availability at most Indian ports remains subject to inquiry.

Adverse weather is expected to disrupt bunker deliveries at Kandla and Sikka from 16–19 April, and at Visakhapatnam from 17–19 April.

In Sri Lanka, a supplier recommends lead times of approximately eight days for all grades at ports including Colombo and Hambantota.

Middle East

In Fujairah, prompt availability remains tight despite low demand, with lead times for all grades steady at 5–7 days, the same as last week. Suppliers in Khor Fakkan report similar lead times.

In Jeddah, VLSFO supply continues to be limited, while LSMGO is sufficiently available. In Djibouti, bunker supply is under pressure, with both VLSFO and LSMGO running low.

At Omani ports—including Sohar, Salalah, Muscat, and Duqm—LSMGO supply remains ample.

By Tuhin Roy

 

Photo credit and source: ENGINE
Published: 16 April, 2025

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