MABUX: Bunker Market this morning, Sept 18

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) continued sharp upward changes on September 17.

380 HSFO - USD/MT 476.07 (+43.11)
180 HSFO - USD/MT 513.73 (+40.22)
MGO - USD/MT 697.43 (+21.45)

Meantime, world oil indexes demonstrated downward changes on Sept.17 Saudi Arabia declared, the kingdom will restore lost oil production by the end of the month.

Brent for November settlement decreased by $4.47 to $64.55 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October delivery fell by $3.56 to $59.34 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 5.21 to WTI. Gasoil for October delivery decreased by 17.25.

Today indexes demonstrate slight downward changes.

Saudi Arabia saying output was recovering much more quickly than initially forecast and could be fully back in two or three weeks. Full capacity of 12 million barrels per day would be back at the end of November, while 11 million barrels will be restored by the end of the month.

International oil companies, fellow members of the OPEC oil cartel and global energy policy makers had heard no updates on the impact of the weekend attack from the Saudis for 48 hours, according to sources with knowledge of the situation. And on Monday, sources briefed on state oil giant Aramco's operations had said it could take months for output to recover.

The attack knocked out half of Saudi Arabia's oil production, or 5% of global output, sending prices soaring when trading resumed on Sept.16. So the new prediction of a quick return to normal output sent prices down sharply on Sept.17.

While the Houthi group, which is fighting a Saudi-led coalition in Yemen, was quick to claim responsibility for the attack, U.S. believes the attacks originated in southwestern Iran. That further increases tension in the Middle East. Moreover some said the attacks involved cruise missiles and drones, indicating that they involved a higher degree of complexity and sophistication than initially thought. At the same time nobody provided evidence or explain what U.S. intelligence they were using for the evaluations. At the same time, Saudi state television said the Saudi Defense Ministry will hold a media conference on Sept. 18 that will show evidence of Iran's involvement in the Aramco attacks, including the use of Iranian weapons. Iran denied it was to blame. That accusation prompted Iran's supreme leader on Sept.17 to rule out talks with Washington.

Iran’s leader Ayatollah Ali Khamenei said talks could only take place if the United States returned to a nuclear accord between Iran and the West that Trump abandoned last year.
U.S.-Iran relations deteriorated after Trump quit the accord and reimposed sanctions over Tehran's nuclear and ballistic programs. He also wants Iran to stop supporting regional proxies, including the Houthis.

Britain and Germany agreed they needed to work with international partners to form a collective response and de-escalate tensions as efforts continued to establish exactly what. The European parties are trying to salvage Iran nuclear pact. Saudi Arabia, which has supported tougher U.S. sanctions on Iran, said an initial investigation showed the strikes were carried out with Iranian weapons.

While the lack of escalation is capping the geopolitical risk premium currently embedded in prices, the attacks have raised profound questions about the vulnerability of Saudi Arabia’s energy system, which could in turn lead to structurally higher risk premiums in future.

U.S. President Donald Trump said on Sept.17 his administration could seal a deal on trade with China before the U.S. presidential election, or an agreement could be reached the day after. Trump claimed that Beijing thinks he is going to win re-election, but that Chinese officials would prefer to deal with someone else. He said he had told China that if the deal comes after the Nov. 3, 2020 election, it would be on terms "far worse" for Beijing than it could achieve right now.

The American Petroleum Institute said Sept. 17 that U.S. stockpiles rose by about 600,000 barrels last week. They dropped by 7.2 million barrels the week before.

We expect bunker prices to demonstrate downward changes today: about 15-20 USD down for IFO, about 15-17 USD up for MGO.