- Total Inventories Fall 18% to 13.1 Million Barrels.
- Ship Fuel Reserves at Lowest Since 2018.
- Jet Fuel and Diesel Slide to Four-Week Low.
Oil product inventories at the UAE’s Port of Fujairah hit a record low on September 15, with ship fuel reserves dropping to their weakest point in almost seven years, according to data from the Fujairah Oil Industry Zone (FOIZ) released on September 17, reports S&P Global.
Significant Drop in Total Inventories
Total stockpiles plummeted by 18% in the week ending September 15, reaching 13.089 million barrels, the lowest level since FOIZ started reporting to S&P Global Commodity Insights in January 2017. Compared to the end of 2024, inventories are down 16%.
Fuel Category Breakdown
- Heavy Distillates: Ship and power generation fuels saw a 24% decline, now at 5.390 million barrels, marking the lowest level since December 2018. This year alone, levels have dropped by 28%.
- Middle Distillates: Jet fuel and diesel fell by 24% to a four-week low of 1.651 million barrels, bringing this year’s total decline to 16%.
- Light Distillates: Gasoline and naphtha stocks decreased by 10%, now at 6.048 million barrels, the lowest since November 25, 2024, wiping out all gains made since late 2024.
Dar Blend Supply Issues
Fuel oil supplies have faced disruptions due to reduced shipments of South Sudan’s Dar Blend crude, which is crucial for some of Fujairah’s refineries. The Montfort refinery, one of the three at the port, has stopped operations. South Sudan exports crude through a single pipeline that runs through Sudan to the Bashayer terminal, supplying the Gulf and Asia. FOIZ data indicates that no incoming shipments of Sudanese crude have been recorded in September. The ongoing conflict between rival generals in Sudan, which has been escalating since April 2023, continues to jeopardise these flows. Although the pipeline had resumed operations after previous disruptions, recent drone strikes on Sudan’s Khartoum refinery and the Heglig oil hub have introduced even more instability.
Reduced Fuel Oil Flows from Iraq
Fuel oil supplies from Iraq have been affected recently. In August, the average daily shipments of fuel oil from Iraq to Fujairah dropped to 43,000 barrels, marking the lowest level since October 2020, as reported by S&P Global Commodities at Sea.
A Shift to West African Supplies
Traders are anticipating an increase in cargoes from West Africa in the upcoming weeks to make up for the shortfall. The demand for high-sulfur fuel oil (HSFO) is quite strong, bolstered by recent term contract signings that have made prompt barge availability tighter. On the flip side, the demand for low-sulfur fuel oil (LSFO) has weakened due to rising prices.
Price Trends in HSFO and LSFO
- HSFO Premiums: According to Platts, the premiums for Fujairah-delivered 380 CST HSFO averaged $14.07 per metric ton in September, up from $12.50 per metric ton in August.
- LSFO Premiums: The premiums for Fujairah-delivered LSFO over Singapore cargo values averaged $14.12 per metric ton this month, nearly double the $7.68 per metric ton seen in August.
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Source: S&P Global
