MABUX: Bunker market this morning, Aug 13.
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) continued a phase of insignificant irregular changes on Aug.12:
380 HSFO – USD/MT – 362.24(+0.34)
180 HSFO – USD/MT – 404.67(-1.16)
MGO – USD/MT – 633.15(+4.65)
Meantime, world oil indexes were little changed on Aug.12 as expectations that major producers would continue to reduce global supplies ran into worries about sluggish growth in crude demand due to the U.S.-China trade war. Brent for October settlement increased by $0.04 to $58.57 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September delivery rose by $0.43 to $54.93 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.64 to WTI. Gasoil for August unchanged: $555.50.
Today morning oil indexes do not have any firm trend so far. Rystad Energy estimated that the short-term oil demand outlook continues to be weak over global economic uncertainty and a simmering trade war between the US and China.
The Chinese economy continues to lag, most recently only posting a 6.2% growth rate, and the US is also showing signs of deceleration. The trade war between the US and China has ratcheted up after the latest US announcement to slap a 10% tariff on $300 billion worth of Chinese goods. The Chinese responded by halting agricultural imports and allowing their
currency to depreciate. Rystad Energy still believes demand growth globally will improve in the second half of 2019, but the recent exchange of US-China trade tariffs and overall weak manufacturing, exports and trade indicators elsewhere in the world could cap demand growth recovery.
Some of the largest maritime security firms have replaced the unarmed British guards on ships traveling in the Persian Gulf with personnel from other countries, fearing that Iran may try to kidnap UK nationals amid heightened tensions in the Middle East and its key oil shipping lanes. Several high-profile incidents in recent weeks and months have increased the tension between Iran and the West in the Middle East and in the most important oil shipping corridor in the world, the Strait of Hormuz, which is in close proximity to Iranian coasts. A U.S. government official and sources in the shipping industry said that there are concerns within the industry that Iran may target to capture UK citizens aboard ships in the Gulf.
Most of the 17 Iranians that Iran arrested last month claiming to be spies for the CIA were working in the Islamic Republic’s oil sector. As per Iranian official sources, the arrested people were involved in espionage into how Iran is moving its oil now that it’s under U.S. sanctions which scare away almost all of Tehran’s legitimate buyers for fear of coming under secondary U.S. sanctions for dealing with Iran. After the U.S. sanctions kicked in, Iran stopped reporting any oil production and sales data and has tightened the ranks of oil traders, whose key job now is to determine if a potential client is legit and not a spy.
The International Energy Agency (IEA) reported on Aug.09, that OPEC’s crude oil production dropped by 200,000 bpd in July from June, and helped by additional cuts of 100,000 bpd from the non-OPEC part of the production cut coalition, the market balance in the short term has tightened slightly. OPEC’s compliance with the production cuts that were extended into 2020 in early July was 119 percent last month, while the non-OPEC countries part of the deal showed overall compliance of 107 percent with their share of the cuts. The slight market tightening, however, will be shattered again next year, as the IEA expects “very strong” non-OPEC production growth at 2.2 million bpd.
The Trump administration has taken its regime change campaign in Venezuela to the next level, initiating a new set of sanctions which may mean a total economic embargo of the country. Last week President Trump signed an executive order freezing all government assets and implementing a total ban on transactions with the government. Now any company – not just American companies – are barred from doing business with the Venezuelan government.
Obviously, oil will be at the center of the U.S.-backed reconstruction effort. The U.S. wants to privatize and open up the oil sector, a far-reaching overhaul that would be radically different from anything that Venezuela has experienced in decades.
We do not expect any drastic changes in bunker prices today. Slight fluctuations plus-minus 2-4 USD may prevail.