- Light Distillates Lead Stock Decline, Middle Distillates Rebound.
- Fujairah Refined Product Exports Hit Record High in July.
- Fuel Oil Shipments Surge as Bunker Demand Slows.
Oil product inventories at the UAE’s Port of Fujairah took a dip of 5.5% in the week ending July 14, breaking a two-month streak of increases and marking the longest run of gains since the port started sharing data with Platts back in 2017. The total stock fell to 19.554 million barrels, although it’s still 26% higher than at the end of 2024, reports S&P Global.
Light Distillates Lead the Inventory Drop
This decline was primarily driven by light distillates like gasoline and naphtha, which dropped 9.1% to 7.388 million barrels, hitting a three-week low. Heavy distillates, used for power generation and marine fuels, also saw a decrease of 6.7%, settling at 9.573 million barrels—the lowest in two weeks. On the flip side, middle distillates such as jet fuel and diesel experienced a 12% rise over the week, reaching 2.593 million barrels, which is a two-week high.
Refined Product Exports Surge to Record Levels
This month, exports of refined oil products from Fujairah are on fire, averaging 961,000 barrels per day in July, the highest level recorded since at least October 2016. This is a notable jump from the 641,000 barrels per day seen in June, partly due to a decrease in local ship fuel demand. Fuel oil exports alone hit a record 525,000 barrels per day in July, a significant increase from 312,000 barrels per day the month before.
Diesel exports also surged, averaging 132,000 barrels per day in July, compared to just 30,000 barrels per day in June. Naphtha shipments rose to 87,000 barrels per day, up from 70,000 barrels per day in the previous month. Interestingly, fuel oil exports to Iraq averaged a record 44,000 barrels per day in July. This spike followed an announcement on July 1 from Iraq’s electricity ministry, revealing that Iran had cut its natural gas exports, which forced several gas-fed power plants in Iraq to shut down as the country faced sweltering summer temperatures.
Bunker Prices Drop as Supply Surpasses Demand
Bunker fuel prices in Fujairah have taken a dip, thanks to a surplus in supply and moderate demand. On July 15, Platts reported that the delivered 0.5% sulfur marine fuel was priced at $509 per metric ton, down from a peak of $555 per metric ton on June 19.
Meanwhile, high-sulfur fuel oil (HSFO) was assessed at $393 per metric ton on July 15, a drop from $465 per metric ton in mid-June. Bunker suppliers, with ample stocks of both low- and high-sulfur fuel oils, were keen to reduce their inventories. Competitive pricing strategies were in full swing, driven by the urgency to quickly turn around barges due to the availability of immediate refuelling slots and sluggish demand in downstream markets.
Bunker Margins Tighten, Despite Some Regional Support
Bunker premiums continued to shrink under pressure in July. The premium for Fujairah-delivered 0.5% sulfur marine fuel over the FOB Singapore benchmark averaged $4.59 per metric ton in June, slipping further to $4.03 per metric ton so far in July. For HSFO, the 380 CST bunker premium over the FOB Arab Gulf benchmark averaged just $3.72 per metric ton in June, a significant drop from the $14.35 per metric ton seen in May.
However, the premium saw a rebound to $14.06 per metric ton during the first half of July. A slight uptick in HSFO demand from Egypt for power generation provided some support for regional stock drawdowns and improved valuations, offering a brief respite to bunker suppliers grappling with tight profit margins.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: S&P Global
