Disrupted Middle Eastern and Russian exports are tightening the global bunker fuel market, according to analyst Cyril Widdershoven of Oilprice.com. Delayed deliveries and higher prices are straining shipowners' schedules, cash needs and margins.
The Hormuz crisis is reaching beyond crude oil and gas into the fuel tanks of vessels that carry world trade. Widdershoven writes that fuel remains available internationally, but getting the right grade at the right port within a workable window is becoming harder.
Supply losses stack up
On October 16, Vitol estimated that high-sulfur fuel oil flows through Hormuz, including Iranian supplies, remained at least 800,000 tons per month below February levels. Ukrainian attacks on Russian refineries have removed an additional estimated million tons monthly, the article says. Meanwhile, North Asian refiners were drawing more than a million tons of HSFO for November processing.
Fujairah shows a partial recovery. Reuters reported on October 1 that third-quarter fuel oil imports had recovered to 2.6 million tons from 845,000 tons in the second quarter. September imports, however, remained approximately half February's level.
Longer lead times, uneven relief
Delivery windows are stretching. ENGINE's October 13 outlook put Singapore's recommended very-low-sulfur fuel oil lead times at 11–18 days, compared with 10–15 days a week earlier. Some Omani ports looked better, with one supplier quoting one to two days for marine gasoil.
Storage figures can mislead, Widdershoven argues. ENGINE reported that Fujairah's heavy distillate and residual stocks averaged 4.72 million barrels in early October, approximately 5% above September's average. Yet local bunker availability remains severely constrained, and those inventories do not all represent immediately deliverable marine fuel.
S&P Global reported in September that strong backwardation, with prompt fuel priced above later deliveries, was discouraging blenders from maintaining stocks.
Higher prices raise financing needs
Prices add to the strain. General Index assessed September VLSFO averages at $872 per ton in Singapore and $939 in Fujairah, up 6% and 15.9%, respectively, from August. An additional $100 per ton increases the cost of a 2,000-ton purchase by $200,000, the article notes, before waiting time or diversion expenses.
Owners are already adjusting. Reuters reported on October 16 that bunker purchases were becoming smaller and more frequent, with greater use of alternative locations including Port Louis, Colombo and Salalah.
Widdershoven expects regional shortages to recur, premiums to stay volatile and booking requirements to lengthen over the coming weeks.
Source: Oilprice.com
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