MABUX: Bunker market this morning, June 17

The Bunker Review was contributed by Marine Bunker Exchange

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) changed insignificant and irregular on June 14:

380 HSFO – USD/M 387.89 (-0.49)
180 HSFO – USD/M – 428.85 (+0.75)
MGO – USD/MT – 638.40 (-0.16)

Meantime, world oil indexes also slightly rose on Jun.14 after a suspected attack on two tankers in the Gulf of Oman near Iran and the Strait of Hormuz, through which a fifth of global oil consumption passes.

Brent for August settlement increased by $0.70 to $62.01 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for July delivery rose by $0.23 to $52.51 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 9.50 to WTI. Gasoil for July stayed also added $6.00.

Today morning oil indexes do not have any firm trend waiting of the driver’s signs from global fuel market.

An attack by an unknown party on two oil tankers in the Gulf of Oman has set up new momentum upward driver for bunker prices. After the possible Iranian attack on three vessels offshore the Emirati port of Fujairah last month, the current attack could be setting the scene for a direct military confrontation. Two tankers, the Front Altair and the Kokuka Courageous, both filled with petroleum and chemical products, such as methanol, were suspected to be hit by a torpedo. The targets don’t involve Saudi or Emirate vessels this time, but Western tankers. The involvement of torpedoes, which suggests a high level of planning by sophisticated culprits, could lead to a military escalation in the ongoing US/Arab-Iranian confrontation.

Meantime, Saudi Arabia called for swift action to secure Gulf energy supplies and joined the United States in blaming Iran for attacks on two oil tankers in a vital shipping route that have raised fears of broader confrontation in the region. Saudi Energy Minister Khalid al-Falih said there must be a rapid and decisive response to the threat to energy supplies, market stability and consumer confidence.

The risks to shipping in the Persian Gulf could lead to ballooning costs for insurance for oil tankers: owners that currently have their vessels in the area are checking and trying to find out more about security, crewing, insurance and legal aspects.

In its latest report the IEA lowered its demand forecast by 0.1 million bpd compared to last month’s report. For its part, OPEC cut its demand growth forecast to 1.14 million bpd this year, a downward revision of 0.07 million bpd.

OPEC brought its oil production down to 29.876 million barrels per day in May - a five-year low for the oil cartel as it struggles to control member production to keep oil prices stable. That production route represents a decrease of 236,000 barrels per day month on month as Iran’s production falters due to sanctions levied by the United States. Iran’s May oil production fell to 2.370 million barrels per day, a decrease of 227,000 barrels per day from April. Nigeria and Saudi Arabia, too, both produced fewer barrels in May, while both Angola and Iraq increased their May production. Total global oil consumption is expected to average 99.86 million barrels per day in 2019.

If the U.S. and China can hash out a trade deal, it would lead to a wave of LNG exports from the U.S. to China. With a deal, the U.S. could account for 21 percent of China’s gas imports by 2025. If the standoff continues, the U.S. would only capture 5 percent of the market. There may also be major implications for the global LNG market. The U.S. is bringing on new projects and is set to become the No. 1 supplier. All that production needs to find a Buyer, and China is expected to take the title as top importer some time early next decade. Without a deal, it’s likely to turn to other countries including Russia, Australia and the Middle East to fulfill its gas demand.

We expect bunker prices may slightly rise today in a range of plus 2-6 USD.