Oil product inventories at the UAE’s Port of Fujairah have seen a significant rebound, increasing by 10% in the week that ended on September 8th. This surge, primarily driven by fuel oils, brings the total stockpile to 16.024 million barrels and reverses a recent decline.
Inventory Levels by Product
The overall increase was led by a substantial 28% rise in heavy distillates, such as fuel oils, which brought their inventory up to 7.095 million barrels. This increase occurred after these stockpiles had fallen to their lowest level since early 2018 the previous week. In contrast, middle distillates (including jet fuel and diesel) experienced a 5% drop to 2.188 million barrels, their first decrease in three weeks. Meanwhile, light distillates, which include gasoline and naphtha, saw a modest 1.3% increase, reaching 6.741 million barrels.
Trade Flows and Exports
The rise in fuel oil inventories was supported by an influx of imports, with the largest volumes coming from Kuwait. According to S&P Global Commodities at Sea, fuel oil imports from Kuwait averaged 53,000 barrels per day (b/d) in September, with significant volumes also arriving from Russia, Iraq, Georgia, and Saudi Arabia. On the export side, refined product exports are averaging over 1 million b/d in September. Major destinations for these exports include Pakistan, which is receiving 103,000 b/d of gasoline, and Saudi Arabia, which is receiving 68,000 b/d of gasoline and a record 74,000 b/d of gasoil.
Mixed Bunker Demand
Downstream bunker demand at the port showed mixed trends. Low sulfur fuel oil (LSFO) demand has recently slowed down. This is due to its price becoming less competitive compared to the Singapore hub, despite a recent need to replenish blending components. As a result, traders anticipate that LSFO delivered premiums will gradually soften. Conversely, high sulfur fuel oil (HSFO) demand has remained strong, creating a balanced market where supply is ample but profit margins are stable. This is reflected in the Platts assessment, which showed the Fujairah-delivered HSFO premium over Arab Gulf cargoes at an average of $15.14 per metric ton so far in September.
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Source: S&P Global
