- Kuwait’s Al Zour refinery has recently initiated a spot sales tender.
- The tender offers 130,000 metric tons of VLSFO.
- Anticipations suggest that VLSFO prices will depend on exports from Al Zour.
Kuwait’s Al Zour refinery has recently initiated a spot sales tender for very low sulfur fuel oil (VLSFO) after a hiatus of over three months. The emergence of this tender caused an immediate softening of VLSFO prices in the Asian market, reports Nasdaq.
Significance of Al Zour Refinery
Market watchers closely monitor Al Zour’s tenders, given its potential as a major global exporter once it operates at full commercial capacity.
Tender Details
The tender offers 130,000 metric tons of VLSFO with a maximum sulfur content of 0.5%, scheduled for loading between Jan. 20 and 21, with the tender closing on Friday.
Market Response and Projections
Singapore’s 0.5% VLSFO cash premium dropped to $3.75 per metric ton, approaching a four-month low. Front-month cracks slightly decreased to premiums of about $12 per barrel in response to the tender.
Future Price Expectations
Anticipations suggest that VLSFO prices will depend on exports from Al Zour this year, with the market eagerly awaiting its full capacity for commercial exports.
Kuwaiti VLSFO Exports
Export trends of VLSFO from Kuwait saw an increase in the first nine months of 2023 due to heightened spot sales. However, they dipped in the fourth quarter after a shift towards term sales instead of spot tenders.
Potential Supply Impact
Once Al Zour operates at full capacity, its VLSFO exports could potentially meet 8% to 10% of Asia’s demand if directed toward the eastern markets, according to industry estimates.
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Source: Nasdaq
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