• 2018 November 2 11:27

    MABUX: Bunker market is awaiting further clarity as Iran sanctions loom

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes have fallen roughly $10 per barrel in the past three weeks, awaiting more signs of a clear direction. The overall market sentiment is bearish. Global trade is also slowing down, with freight rates decreasing after an extensive period of growth. OPEC has started sending mixed signals, forecasting that the global oil market would shift to oversupply in Q4 2018 amid high stockpile rates.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs), demonstrated slight irregular changes in the period of Oct.25 – Nov.01:
        
    380 HSFO - up from 469.79 to 472.57 USD/MT     (+2.78)
    180 HSFO - up from 517.21 to 518.71 USD/MT     (+1.50)
    MGO         - down from 722.86 to 719.79 USD/MT (-3.07)


    Cumulative oil production by Russia, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September. That's an increase of 10 million bpd since the start of the decade, meaning the three producers alone now meet a third of global crude demand.

    Meantime, OPEC and its Russia-led non-OPEC partners in the production cut deal may have to change course in the current relaxing of the cuts, due to increased inventories in recent weeks and uncertainties about the global economy. OPEC and allies agreed in June to relax compliance rates with the cuts to 100 percent from the previous over-compliance and achieved a combined compliance rate of 111 percent in September. The IEA in turn pressed the cartel to increase production.

    Russia has already reversed the entire 300,000 bpd cut and additionally boosted production last month: it reached 11.36 million bpd - a record high for the post-Soviet era. Although RF hit a post-Soviet record in its oil production last month, it doesn’t plan to raise output to 12 million bpd by the end of 2018, or in the near term, because this wouldn’t fit Moscow’s economic development plans. Currently, Russia is pumping 150,000 bpd above the October 2016 level, so in total, the country has increased production by 450,000 bpd since May.

    It is expected that China will lead global refinery capacity expansion and investments with 3.12 million bpd additional refining capacity and US$67.3 billion capital expenditure through 2022. Total refining capacity in the world is expected to grow by 15.1 percent between 2018 and 2022. Among individual countries, China is the leader, with ten new-build refineries expected to come on line by 2022, followed by Nigeria and Kuwait. The top ten also includes Iraq, Iran, Turkey, Brunei, Indonesia, the Philippines, and Saudi Arabia.

    Meantime, it was reported that China’s largest refiners, state-held Sinopec and China National Petroleum Corporation (CNPC), haven’t booked any crude oil cargoes from Iran for November due to fears they would be in breach of the U.S. sanctions on Iranian oil. The key concern is the uncertainty over whether Iran’s Chinese customers would obtain waivers from the sanctions. Iran, for its part, is keen to keep its single biggest oil customer when U.S. sanctions on Iranian oil exports kick in. Forecasts have assumed that China will keep buying Iranian oil and could be the only certain meaningful customer of Iran, because the other major buyer, India, is even more hard-pressed by the United States to wind down purchases from Tehran.

    The European Union (EU) in turn is working to set up a payment mechanism for trade with Iran, and that mechanism should be legally in place by November 4, when the U.S. sanctions on Iran return. Meantime, it is expected that the mechanism won’t be operational until early in 2019. Still, the biggest European companies are withdrawing from Iran due to the U.S. sanctions. The EU’s oil imports from Iran are also expected to cease as refiners are not eager to open them-selves up to risk. Iran’s crude oil and condensate exports fell to 1.9 million bpd in September.

    The United States has recently hinted that it was at least considering waivers, but U.S. Treasury Secretary Steven Mnuchin said that it would be more difficult for Iranian oil customers to get waivers from the sanctions than it was during the Obama administration, and the United States would issue waivers, if any, only to buyers that have significantly reduced Iranian purchases.

    China finds it hard to understand why the United States is not sending senior government officials to a major import expo in Shanghai next month. Set to run from Nov. 5 to Nov. 10, the China International Import Expo will bring together thousands of foreign and Chinese companies, aiming to boost imports, allay foreign concern about China's trade practices and show readiness to narrow trade gaps. The United States does not plan to send senior government officials to the fair, urging China to end what it called harmful and unfair trade practices.

    At the same time more than 70 percent of U.S. firms operating in southern China are considering delaying further investment there and moving some or all of their manufacturing to other countries as the trade war bites into profits. The trade war is shifting both supply chains and industrial clusters, mostly towards Southeast Asia. U.S. companies reported facing increased competition from rivals in Vietnam, Germany and Japan, while Chinese companies said they were facing growing competition from Vietnam, India, the United States and South Korea. The top concern of companies was the rising cost of goods sold, which resulted in reduced profits. Other concerns included difficulties managing procurement and reduced sales.

    Production in the U.S. is set to rise further. U.S. drillers added two oil rigs in the week to Oct. 26, bringing the total count to 875, the highest level since March 2015. More than half of all U.S. oil rigs are in the Permian basin in West Texas and eastern New Mexico, the country's biggest shale oil formation.

    The U.S. has been trying to delay the implementation of regulations on maritime fuels beyond the January 1, 2020 start date. However, the International Maritime Organization (IMO) dismissed the effort, and said that the regulations are set to go ahead as scheduled. Be-ginning in 2020, maritime ships will have use fuels with sulfur concentrations of just 0.5 per-cent, down from the current limit of 3.5 percent. Besides, the prohibition of the carriage of non-compliant fuel oil for combustion purposes or operation on board a ship (unless equipped with a scrubber) will enter into force on 1 March 2020.

    With Iran sanctions set to take effect in a few days, the market is awaiting further clarity. Saudi Arabia and Russia have vowed to cover any supply shortfall, but Iran’s oil exports likely won’t go to zero. We assume bunker prices may continue volatile irregular fluctuations in the beginning of next week with further possible transformation into more balancing phase.

     

     

     

     

     

     

     

    All prices stated in USD / Mton
    All time high Brent = $147.50 (July 11, 2008)
    All time high Light crude (WTI) = $147.27 (July 11, 2008)




2020 January 29

18:07 Korean Register publishes technical information on ammonia as an alternative marine fuel
17:35 Port of Baku handled record number of containers and wheeled vehicles in 2019
17:27 WinGD advances clean fuel research with flexible injector concept
17:10 Global Shipping Body (ICS) issues guidance to shipowners in the face of the Corona Virus
15:17 KTK-Bunker supports 7th International Forum of Dredging Companies as its Sponsor
14:34 Sredne-Nevsky Shipyard launches yet another minesweeper Project 12700
14:03 Van Oord starts cooperation on Estonian offshore wind development
13:15 Wärtsilä to supply world’s first hybrid powered self-discharging bulk carriers
12:38 FESCO delivered four gantry cranes from St. Petersburg to Primorye along NSR for Global Ports
12:05 Inmarsat and ITC Global to expand connectivity options for Energy, Maritime and Yachting
11:42 Yury Borisov to supervise shipbuilding development, Marat Khusnullin - transport programmes
11:19 Andrey Belousov to coordinate activities of Transport Ministry and ad hoc Federal Agencies
11:00 Second phase of Novosibirsk Shipping Gateway's reconstruction complete
10:48 DCSA establishes Track and Trace standards for the global container shipping industry
10:36 First multipurpose dry cargo carrier of Project RSD59 laid down for Astrol
10:13 Onezhsky shipyard launches workboat with hybrid propulsion system
09:51 Bunker prices go down at the port of Saint-Petersburg, Russia (graph)
09:49 MABUX: Bunker market this morning, Jan 29
09:32 Brent Crude futures price is up 1.26% to $59.55, Light Sweet Crude – up 1.22% to $54.13
09:14 Baltic Dry Index is down to 539 points

2020 January 28

18:05 Cheniere Energy celebrates 1000th LNG cargo milestone
17:40 NYK establishes first exclusive RORO terminal in Egypt
17:30 Global Ports Holding’s JV buys remaining shares of Malaga Cruise Port concession
15:43 Severnaya Verf starts cutting metal for fifth processing trawler of Project 170701 ordered by NOREBO Group
15:02 Hyundai's Engine Machinery Division announces the completion of the first shop test for the first of six ME-GI engines for container ships for Eastern Pacific Shipping
14:38 Metal Shark delivers patrol boat to Puerto Rico customer
14:16 Bunker prices are stable at the Far East ports of Russia following the recent growth (graph)
14:02 CMA CGM has announced FAK rates from Middle East Gulf and Pakistan to North Europe and the Mediterranean
13:27 Cheniere Energy celebrates 1000th LNG cargo milestone
13:02 Diversification of Poland’s natural gas supply sources and directions is progressing
12:35 Vostochnaya Stevedoring Company starts shipping trains to Elektrougli of Moscow Railways
12:01 Carisbrooke takes D.I.Y approach to BWT compliance with Optimarin for huge savings, efficiency and on-schedule operations
12:00 IMO and WISTA to promote greater diversity in the maritime sector
11:41 New video highlights benefits of working with IMO
11:19 Damen develops new concept vessel – the Offshore Support Vessel (OSV) 9020
11:07 Rainmaking partners maritime giants with tech startups to energise innovation
10:39 Tallink and Silja Line to establish annual summer cruise to Saint-Petersburg
10:16 Ships of RF Navy's Baltic Fleet assisted the crew of a foreign yacht in the Gulf of Aden
10:02 MABUX: Bunker market this morning, Jan 28
09:54 Dredging and Hydraulic Engineering Structures Congress will feature engineering ships buyers subordinate to Rosmorrechflot
09:33 Brent Crude futures price is down 0.41% to $58.34, Light Sweet Crude – down 0.28% to $52.99
09:18 Baltic Dry Index is down to 546 points

2020 January 27

18:07 Port of Oostende, DEME Concessions and PMV announce exclusive partnership for green hydrogen plant in Ostend
17:35 Fincantieri announces the launching ceremony of the "Emilio Bianchi" frigate
17:19 Semco Maritime wins rig order for Seadrill
17:02 Baltic Workboats’ PILOT 15 WP wins Small Pilot Boat Award for 2019
16:39 Port of King’s Lynn seals new deal with leading recycling specialist
15:57 Two main engines loaded onto lead chemical carrier of Project 00216М named PortNews
15:04 Seaspan closes purchase of a fleet of six containerships
14:48 Average wholesale prices for М-100 HFO up to RUB 10,737 in RF spot market
14:24 Royal Navy to present exclusive updates on NavyX at Unmanned Maritime Systems Technology 2020
14:01 High Speed Transfers takes delivery of fourth Damen Fast Crew Supplier 2710 in 18 months
13:35 Northern Fleet detachment leaves Mediterranean sea
13:13 Baltic Fleet guard ship Yaroslav Mudryi calls at the port of Oman
12:51 Klaipėda Port remains an important centre-line of the national economics
12:26 Largest ports of Latvia change their focus and intend to make investments to improve their competitiveness
11:10 Vladivostok Sea Fishing Port handled 4.59 million tonnes of cargo in 2019, up 1.5% Y-o-Y
09:59 Victor Golomolzin takes the helm of Oktyabrskaya Railway
09:37 Brent Crude futures price is down 3.41% to $58.62, Light Sweet Crude – down 2.29% to $52.95
09:37 MABUX: Bunker market this morning, Jan 27