Bunker Sales Fell In February As Traders Avoided Russia

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  • Premiums of Fujairah-delivered 380 CST HSFO against the FOB Arab Gulf 180 CST HSFO cargo assessment averaged $19.31/mt in February.
  • The premiums averaged $13.55/mt over March 1-15, according to the data.
  • Traders said they expect the pricing to support demand for the rest of March.

Bunker sales in the Port of Fujairah fell to their lowest level since records began in 2021 in February, as traders shied away from selling to Russian-flagged vessels and purchasers tried to limit purchases due to high prices following Russia’s invasion of Ukraine as reported by S&P Global.

Bunker demand

Total sales dropped 5.2% month on month to 617,622 cu m, the lowest since at least January 2021, according to data published March 16 on the Fujairah Oil Industry Zone website.

FOIZ began reporting monthly bunker sales in March 2021 exclusively to S&P Global Commodity Insights, with the data starting in January 2021.

Bunker demand dropped as local suppliers rejected purchase orders from Russian-flagged vessels, local sources said.

The premiums strengthened to average $41.86/mt over March 1-15, the data also showed.

“Volatility has taken its toll on bunker demand, especially as the flat price is breaking new bounds almost every other day,” a Fujairah-based bunker supplier said.

Economics dwindled 

“Prior to the peak of the geopolitical tensions, weak arbitrage economics have already dwindled LSFO inventories at Fujairah to crimp demand,” a Fujairah-based trader said.

Stockpiles of heavy distillates, including LSFO, at Fujairah, dropped to a three-month low on Feb. 14, according to FOIZ data.

Skyrocketing insurance premiums also pushed up freight rates in the Black Sea, where suppliers look for LSFO blending components, thus increasing costs at Fujairah, according to bunker suppliers.

The spread averaged minus $22.45/mt over March 1-15, from minus $6.56/mt in February, according to S&P Global data.

HSFO bunker sales are holding up in March, traders said, after high prices curbed demand in February.

“Traders are trying to undercut the competition and aggressive fixing levels have been seen since February.”

Trade pricing

Premiums of Fujairah-delivered 380 CST HSFO against the FOB Arab Gulf 180 CST HSFO cargo assessment averaged $19.31/mt in February, below the average of $22.27/mt in January, S&P Global data showed.

The premiums averaged $13.55/mt over March 1-15, according to the data.

Traders said they expect the pricing to support demand for the rest of March.

Singapore delivered 380 CST HSFO averaged $2.67/mt below Fujairah in February, compared with a discount of $8.71/mt in January, S&P Global data showed.

The discount averaged $2.55/mt over March 1-15, the data also showed.

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Source: S&P Global

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