- Gibraltar bunker fuel’s premium to 3.5% sulfur CIF Mediterranean fuel oil cargoes at $176/mt on September 30.
- The premium averaged $149/mt September 17-23, the equivalent period of 2018 averaged to $24/mt.
- The premium of 380 CST fuel oil to the 3.5% sulfur fuel oil FOB Rotterdam barge benchmark reached $52/mt.
According to an article published in Platts, the premium of 380 CST fuel oil in Gibraltar to the regional benchmark hit its widest point ever on September 30.
Crude outages
Amid tightening availability of 3.5% sulfur fuel oil and concerns about future supply levels following crude outages in Saudi Arabia.
S&P Global assessed Gibraltar bunker fuel’s premium to 3.5% sulfur CIF Mediterranean fuel oil cargoes at $176/mt Monday, the highest level since the assessment began in September 2002.
The premium averaged $149/mt September 17-23. In the equivalent period of 2018, it averaged $24/mt, Platts data showed.
Growth of HSFO
“There’re no cargoes to buy, the only product we have is in a tank,“ one bunker supplier in the Mediterranean said, adding that “there’s no supply to loosen uptight [bunker] availability.” Availability of high sulfur fuel oil has grown increasingly tight as refiners switch over to 0.5% sulfur fuel oil, to provide compliant fuel for the upcoming 0.5% sulfur limit in marine fuel from the start of 2020, as ruled by the International Maritime Organization.
Refinery upgrades
According to fuel oil market sources, refinery upgrades in Europe have led to a severe shortage of EU-qualified HSFO. EU-qualified material is produced within a refinery within the bloc and is often required by certain Spanish bunker market players, putting pressure on supply in the region, including at Gibraltar.
The market for non-EU qualified material, such as HSFO produced in Russia, is said to be less tight.
Attacks on oil fields make it volatile
On top of this, the attacks on the Abqaiq oil facility and Khurais crude oil field in Saudi Arabia on September 14 sent considerable jitters through the HSFO market that is still being felt.
Saudi Arabia may need to burn greater volumes of HSFO in its utilities than usual in place of crude oil, which it will likely need to export.
Regional benchmark reached in the Netherlands
In Northwest Europe, the premium of delivered 380 CST fuel oil at Rotterdam, in the Netherlands, to the regional benchmark also rose to its highest point on record Monday, with bunker suppliers citing tight supply and loading delays of two to seven days.
The premium of 380 CST fuel oil to the 3.5% sulfur fuel oil FOB Rotterdam barge benchmark reached $52/mt Monday, its highest since the assessment of the spread started on a weekly basis in October 1996.
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Source: Platts
