MABUX: Bunker Market this morning June, 24

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) increased on June. 21

380 HSFO - USD/MT 397.92 (+6.25)
180 HSFO - USD/MT 438.17 (+6.09)
MGO - USD/MT 649.56 (+6.62)

Meantime, world oil indexes also demonstrated upward changes on June. 21

Brent for August settlement increased by $0.75 to $65.20 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for August delivery rose by $0.36 to $57.43 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 7.77 to WTI. Gasoil for July delivery increased by $7.50.

Today indexes continue to rise as tensions remain high between Iran and the United States, with U.S. Secretary of State Mike Pompeo saying more sanctions on Tehran would be announced.

U.S. President Donald Trump had authorized military strikes against Iran in response to the strike against a U.S. surveillance drone on June,20, but called off the attack at the last minute. Targets had included Iranian radar and missile batteries, the paper cited senior administration officials involved in, or briefed on, the deliberations. The strikes were set for early in the day to minimize risk to the Iranian military or to civilians. It was unclear if attacks on Iran might go ahead later, nor was it known whether Trump had changed his mind or whether his administration had become concerned about logistics or strategy. Given the heightened tensions, the U.S. Federal Aviation Administration issued an emergency order on June,20 prohibiting U.S. operators from flying in Iran-controlled airspace over the Strait of Hormuz and Gulf of Oman until further notice. The incident underlined the risk of disruptions to global oil supplies coming out of the Persian Gulf, where six oil tankers have been damaged by explosions in the past six weeks.

At the same time U.S. President Donald Trump said over the weekend that the U.S. will impose “major additional sanctions” against Iran this week after Tehran’s Islamic Revolutionary Guard Corps said it shot down the U.S. RQ-4A Global Hawk surveillance drone. Iran accused of incursion and spying over Iranian airspace, while the U.S. said that the aircraft was in international airspace when it was targeted. However, the president noted that he has not ruled out using military force against Iran in the future.

Elsewhere, Trump’s highly-anticipated meeting with Chinese leader Xi Jinping later this week will be closely watched. Oil prices could also see another sharp upside if the U.S. president and his team hold, as he has promised, positive talks with Xi at the G-20 summit.

OPEC members have postponed their scheduled review of the existing agreement on output restraint by a week to July 1. Non-members, most importantly Russia, will join the following day. It is expected, that the output cut of 1.2 million barrels a day to be extended through the end of the year, although Saudi Arabian Energy Minister Khalid al-Falih has indicated that quotas for individual countries may need to be recalculated.

The number of active oil and gas rigs in the United States fell again this week according to Baker Hughes, as the overall rig count reaches the lowest point since February 2018. The total number of active oil and gas drilling rigs in the United States fell by 2 according to the report, with the number of active oil rigs increasing by 1 to reach 789 and the number of gas rigs decreasing by 4 to reach 177. The combined oil and gas rig count is 967, with oil seeing a 73-rig decrease year on year and gas rigs down 11 since this time last year. Despite the rig decline year on year, US production is still almost 2 million barrel per day higher year on year. US oil production is keeping the prices in check, although falling back for the second week in a row on June 14 to 12.2 million bpd down from the all-time high of 12.4 million bpd.

We expect bunker prices to demonstrate upward changes today: 3-5 USD up for IFO, 5-7 USD up for MGO.