MABUX: Bunker market this morning, Sept 17

The Bunker Review was contributed by Marine Bunker Exchange (MABUX)

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) jumped up on Sep.16:

380 HSFO - USD/MT – 432.96 (+31.06)
180 HSFO - USD/MT – 473.51 (+29.59)
MGO - USD/MT – 675.98 (+21.12)

Meantime, world oil indexes surged on Sep.16 after an attack on Saudi Arabian oil facilities on Sep.14 shut in the equivalent of 5% of global supply.

Brent for November settlement increased by $8.80 to $69.02 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October delivery rose by $8.05 to $62.90 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $6.12 to WTI. Gasoil for October jumped by $60.25.

Today morning oil indexes have turned into slight downward correction.

The attack on the state-owned producer Saudi Aramco's processing facilities at Abqaiq and Khurais has cut output by 5.7 million barrels per day. The company has not given a timeline for the resumption of full output. It is expected that Saudi Arabia's oil exports will continue as normal this week as the kingdom taps into stocks from its large storage facilities. However, the return to full oil capacity could take weeks. Some sources said that the attack on Saudi Arabia's plants, including the world's biggest petroleum-processing facility at Abqaiq, came from the direction of Iran, and cruise missiles may have been used. Initial reports indicated the attack came from Yemen.

U.S. President Donald Trump said that the United States was "locked and loaded" for a potential response to the attack on Saudi Arabia's oil facilities. Trump also authorized the use of the U.S. emergency oil stockpile to ensure stable supplies after the attack. As per U.S., there was no evidence the attack came from Yemen, where a Saudi-led coalition has been battling the Houthis for over four years in a conflict widely seen as a proxy war between Saudi Arabia and Shi'ite Muslim rival Iran.  Tensions between Washington and Tehran were already running high because of a long-running dispute between the two nations over Iran's nuclear program that led the United States to impose sweeping sanctions.

The U.S. and China are trying to ease tensions in an effort to head off another escalation in the trade war. Over the last week, both Washington and Beijing offered gestures of good will, delaying tariffs and exempting certain products from those levies. China announced a delay in tariffs; President Trump responded by pushing off planned tariffs by two weeks. The easing of trade tensions helped to boost U.S. agricultural prices, which will be highly welcomed news to American farmers. It was also suggested that the “mini deal” is possible, one that likely would consist of Chinese purchases of U.S. commodities and pledges to protect U.S. intellectual property, in exchange for tariff relief.

The International Energy Agency (IEA) said rising U.S. shale oil and gas production has turned the United States into the world’s largest oil and gas producer, which in turn has changed the entire energy landscape both in America and abroad. U.S. crude oil exports have soared since the ban was lifted at the end of 2015, to reach 3.159 million bpd on average in June 2019. The EIA’s estimates from last month showed that petroleum and natural gas production in the United States jumped by 16 percent and 12 percent, respectively, in 2018, setting new production records and placing the United States as the world’s single largest producer of oil and natural gas.

Shipping companies have become increasingly reluctant to supply Venezuela with vessels to ship its crude oil to foreign markets for fear of losing their insurance. As a result of this, Venezuela has resorted to using smaller but more expensive vessels to ship its crude abroad. The latest round of the U.S. sanctions was signed in August and they spread to anyone doing business with the Maduro government. Following the signing of the order for the sanctions, the Shipowners’ Club told its members to “exercise caution” in their dealings with Venezuela.

We expect bunker prices may continue upward evolution with gradual slowdown today in a range of plus 8-12 USD.