• 2018 October 4 15:23

    MABUX says Iran sanctions remain a key factor supporting bunker prices

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes climbed this week. The markets have been primarily focused on the impact of the Iran sanctions. The concerns are how much oil will be removed from the global supply and whether OPEC and its allies can make up the difference. Japan and South Korea have both ceased all oil trading with Iran, and India and even China have drastically reduced oil volumes from the country.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs), also demonstrated firm upward trend in the period of Sep.27 - Oct.04:
        
    380 HSFO - up from 465.14 to 491.57 USD/MT (+26.43)
    180 HSFO - up from 509.57 to 532.14 USD/MT (+22.57)
    MGO        - up from 729.14 to 761.36 USD/MT (+32.26)

    OPEC’s oil production in September rose by 90,000 bpd from August to 32.85 million bpd-the highest level so far this year, but a plunge in Iranian production partly offset higher production in Saudi Arabia, Angola, and Libya. Oil production in Iran dropped by 100,000 bpd from Au-gust to stand at 3.45 million bpd in September, while Venezuela’s production further dropped to 1.25 million bpd last month from 1.30 million bpd in August. These losses resulted in the 12 OPEC members bound by the supply cut deal-all OPEC members excluding Libya and Nigeria and recently joined Congo-actually pumping 70,000 bpd less in September than in August.

    Meantime, Saudi Arabia is discussing the restart of crude oil production in the neutral zone be-tween Saudi Arabia and Kuwait. Joint oil production in the neutral zone was suspended in 2015. The neutral zone could be pumping half a million barrels daily in a few months, which would add to more than 10 million bpd of Saudi production and almost 3 million bpd on Kuwaiti production based on the latest figures for July.

    Russia’s oil production averaged 11.347 million bpd between September 1 and 27, up by more than 130,000 bpd compared to August and to set a new record-high in the post-Soviet era.  In August, oil production was virtually flat compared to July as Moscow kept output at near post-Soviet record, after having reversed most of its production cuts under the OPEC+ deal the previous month. Russia also assured that it can bring a couple of hundred thousand barrels in the short term.

    Goldman Sachs admitted that Iran’s supply losses have mounted much faster than expected, having dropped about 0.65 million barrels per day bpd since April. More losses are expected with sanctions set to take effect in early November. Iran’s oil exports to Europe, Japan and South Korea have already plunged to negligible levels. The latest news from India suggests that Indian refiners are going to be much more cautious than expected. It was reported that India, at least as of now, is set to cut oil imports from Iran close to zero in November.

    China has cut some purchases from Iran as well. Last month, Chinese refiners and oil traders were said to have started to switch to using Iran-owned tankers for almost all their crude oil imports from Tehran, in order to keep Iranian oil flowing to China. But shipping and insurance sources told that Iran faces difficulties in insuring its own ships because western re-insurance firms are quitting their Iranian businesses.

    The U.S. special envoy for Iran told the UN that Washington will make sure there will be enough oil to go around when sanctions against Iran kick in after November 4. This weighed on prices a little. Meanwhile, the EU announced a plan to continue buying Iranian crude via a special-purpose vehicle for barter transactions. The news was bearish for oil, but some analysts expressed scepticism about the efficiency of the mechanism on the grounds that the U.S. could simply expand the scope of the sanctions to include barter deals between the EU and Iran.

    Iraq’s ministry of oil has published a very optimistic report on the country’s capability to ramp up production, but internal political issues could lead to a new crisis. On Oct.07, Kurdistan is voting for a new parliament. The Kurdish elections are hugely significant for the region, as they not only decide who is going to be put forward as the potential president of Iraq, but also re-shape the region as an entity and its relations not only with Baghdad, but also with Iran and Turkey. A further destabilisation of Iraq would be an outcome that the market aims to avoid at the moment.

    As the trade war between the U.S. and China deepens, political spats between the world’s two largest economies are surfacing or intensifying. And the rhetoric is getting chillier. Issues range from the plight of China’s Uighurs and sanctions against the Chinese military to President Donald Trump’s accusation that China is interfering in upcoming U.S. midterm elections.

    It was reported an increase of a single oil and gas rig in the United States last week, bringing the total number of active oil and gas rigs to 1,054 according to the report, with the number of active oil rigs decreasing by three to reach 863. On the production side, the EIA’s estimates for US production were for an average of 11.10 million bpd – the same as last week.

    Trafigura and BP Singapore have merged their fuel oil and gasoil trading desks ahead of the 2020 deadline, which will ban all bunkering fuel with sulfur content of more than 0.5 percent unless the vessel has a scrubber. Traders are clearly preparing for a huge slump in fuel oil demand. Last calculations show that the IMO 2020 rules will spur enough demand for middle distillates and low-sulfur fuel oil, with the spread between high-sulfur fuel oil and middle distil-late swelling from US$25 a barrel to as much as US$100 a barrel.

    Besides, the IMO 2020 regulations may eliminate demand for around 2 million barrels of high-sulfur fuel oil daily. That’s two-thirds of what the maritime transport sector consumes currently. These displaced barrels of high-sulfur fuel could be processed into lighter fuels, but prices will have to fall enough to make this secondary processing economical.

    The tension between dwindling Iranian supply and the extent to which OPEC+ will increase production is going to dominate the market narrative over the next few weeks. We expect bunker prices to continue upward trend in near-term outlook.

     

     

     

     

     

     

     

    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 August 7

18:32 Maersk revamps Europe to Middle East & Indian Subcontinent network
18:00 Rosmorport's to beef up its icebreaking fleet to 38 units in 2020
17:00 World’s first zero-emissions top handlers performing well at Port of Los Angeles
16:01 Port of HaminaKotka seven-month volume fell 16.7%
15:09 Launching of Russia’s first LNG-powered passenger ship Chaika held at Zelenodolsk Shipyard
14:21 North Carolina Ports records year-over-year increases in Fiscal Year 2020
14:09 Cargo traffic at Port Kavkaz in January-July rose 9%
13:21 ABP invests in Port of Lowestoft to support UK Southern North Sea energy sector
13:19 Krasnoye Sormovo Shipyard hosts launching ceremony for the RSD59 series MS Pola Marina
12:49 Rosmorport plans expansion of its fleet by 24 newbuilds
12:08 Jan De Nul signs contract with Dogger Bank Wind Farm
11:22 The second tanker manufactured in Azerbaijan launched for the next stage of construction
10:37 MSC’s Golden Horn service links China, Korea & Russia’s east coast
09:59 Ecochlor receives IMO BWMS Code Type Approval
09:51 MABUX: Bunker market this morning, Aug 07
09:16 Baltic Dry Index as of Aug 6
09:12 Crude futures prices turn down again

2020 August 6

19:00 FSL Trust agrees to sell three containerships
18:27 Sumitomo Heavy Industries has been granted an “Approval in Principle” for a medium-size high-pressure LNG dual-fueled tanker
18:21 Port of Rostov-on-Don seven-month volume rises 4% to 12.7 million tonnes
18:07 ICTSI 1H2020 net income down 12% to US$113.4mln
17:26 Royal IHC awarded major contract for supply of FPSO equipment for Yinson
17:25 Vodohod’s newbuild Mustai Karim arrives at Saint Petersburg
16:36 Nevsky Shipyard launches the Pavel Leonov, last ship of PV22 series duo
16:15 North Sea Port, Flemish Waterways plc, Port of Antwerp, Port of Oostende, Port of Zeebrugge, the Agency for Maritime and Coastal Services, and the Joint Nautical Management to introduce SWINg in 2021
15:43 Zelenodolsk Shipyard to host tomorrow launching and keel-laying ceremonies
15:41 Maritime Autonomous Surface Ships Port Network was established in Singapore
14:27 MABUX Bunker Weekly Review
13:54 Tolyattii bound heavylift project cargo successfully handled at Port Bronka
13:27 Alaska Marine Lines rail barges upgrade ballast systems
12:46 Davie confirms polar leadership with icebreaker launch
12:35 Transit container transport by RZD network soars 30% in Jan-Jul
11:40 CMA CGM to launch its ever-faster service connecting Spain with Algeria
11:35 Carnival Cruise Line joins industrywide pause in U.S. through October 31
10:18 Shell signs charter contracts for six newbuild LNG carriers
10:15 Fourth IMO Greenhouse Gas Study: Shipping emissions are projected to increase by up to 50% until 2050, relative to 2018
09:58 The Flemish government, Port of Antwerp and SeReAnt together improve the water quality at the Port of Antwerp
09:26 Baltic Dry Index as of Aug 5
09:21 Crude futures prices resume climb
09:10 MABUX: Bunker market this morning, Aug 06
08:11 NYK starts operation of its first finished-car logistics terminal in Japan

2020 August 5

18:57 Valenciaport triples air quality control cabins
18:16 U.S. Coast Guard suspends search for missing spearfisher off Maui
18:04 Port of Helsinki turnover decreased by 26.7% to EUR 33.4 million in January–June 2020
17:35 A delegation of the Port of Gdansk visits Klaipeda
17:06 Voluntary ship slowdown through Swiftsure Bank begins August 1
16:49 Mississippi River will get deeper
16:39 MOL introduces FOCUS Project Part Ⅲ: Virtual Ship Visit Application 'Fleet Tour'
16:29 Admiralty Shipyards starts building fourth CT-192 series trawler the Kapitan Martynov
15:27 Solstad secures contract from BP for three vessels in Australia
14:38 ABS to class first Taiwan-built offshore installation vessel
13:22 Hurtigruten temporarily suspends all expedition cruises
13:18 Krasnoye Sormovo to launch the MS Pola Marina cargo ship on August 7
13:12 The Vostochnaya Stevedoring Company completes the upgrade of more than 18,000m2 of storage yard
13:08 Concept of a modular composite fishing boat gets the thumbs up from MARINET
12:39 Scorpio Bulkers to build Wind Turbine Installation Vessel (WTIV) at DEME
12:01 Fincantieri and Saipem sign deep-seabed mining agreement
11:58 MARINET expects draft amendments on autonomous shipping to Russia’s MSC to be submitted by the end of the month
11:13 Future 12th expeditionary fast transport (EPF 12) for US Navy successfully completes acceptance trials
11:06 SEA-KIT bags two USV orders from Fugro