MABUX: Bunker market this morning, July 25.
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) changed insignificant and irregular on July 24:
380 HSFO – USD/MT – 421.06(-0.70)
180 HSFO – USD/MT – 457.68(-1.17)
MGO – USD/MT – 658.52(+0.38)
Meantime, world oil indexes changed also irregular on Jul.24 while support from a large decrease in U.S. crude stockpiles was compensated by investors’ worries about global oil demand.
Brent for September settlement decreased by $0.65 to $63.18 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September delivery lost $0.89 to $55.88 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $7.27 to WTI. Gasoil for August added $7.50.
Today morning oil indexes does not have any firm trend so far.
Energy Information Administration data on Jul.24 showed a large drawdown in U.S. crude stockpiles. Crude inventories fell by 10.8 million barrels in the week to July 19. Analysts expected a decrease of 4 million barrels.
The seizure of a British oil tanker by Iran has still upward potential for fuel prices. The seizure comes as retaliation for the British seizure of an Iranian tanker earlier this month. Oil prices have not spiked, as they might have in the past, but the shipping industry is bearing the impact of the fallout. Shipping and insurance costs have already been on the rise and the latest event. Asian refiners in particular will be even keener now to search for alternative oil supplies and ship owners will look for alternative routes where possible, further adding to costs.
Meantime, Iranian officials have reassured Iraq that there would be freedom of navigation in the Strait of Hormuz, the most critical oil shipping lane in the world. As per official statement made by Iran, the Islamic Republic of Iran is not willing to escalate tensions in the region and with other countries, and will never initiate war and tension. For Iraq, the Persian Gulf and the Strait of Hormuz, which Iran has repeatedly threatened to blok, are the key export routes of more than 3 million bpd of Iraqi crude oil from its southern ports lying on the Persian Gulf. Cutting off Iraq’s crude oil exports would be disastrous for the country, which relies very much on oil revenues to support its budget.
On Jul.22, the Trump administration announced sanctions on Chinese state-owned oil trader Zhuhai Zhenrong Co. for violating U.S. sanctions on Iran. China has continued to stockpile oil from Iran, despite the U.S. ending waivers in May. The move may also add yet another point of contention between the U.S. and China has they seek to negotiate a resolution to their trade war.
At present, China is one of the only staunch supporters of the Tehran regime. In June China and Iran conducted a joint naval exercise near the ¬strategic Strait of Hormuz in the Persian Gulf. A Chinese flotilla of two ¬Chinese destroyers, a logistics ship and one helicopter, exercised with the Iranian navy. For China the Persian Gulf is of the utmost importance, and Iran is playing a major role in its crude oil supply strategy. In a possible Iran, US/UK confrontation, the role of China should be taken into account.
Libya’s largest oil field was briefly knocked offline at the end of last week, but was quickly restarted. If Libya can manage to bring production online and maintain it, the increase would exacerbate the global glut. However, that all largely depends on a resolution to the civil war.
Venezuela (the country has the world’s largest oil reserves), could be pumping as little as below 500,000 bpd of crude oil next year amid the economic and political crisis. The sanctions that the United States imposed on Venezuela’s oil industry have failed to result in a regime change nearly six months after opposition leader Juan Guaidó declared himself interim president and won the support of the U.S. and many other western nations. OPEC pointed recently that Venezuela’s crude oil production in June dropped by 16,000 bpd from May to stand at 734,000 bpd. To compare, Venezuela’s crude oil production in 2017 averaged 1.911 million bpd. Despite the economic collapse, Venezuela’s crude oil and refined oil products exports rose by 26 percent in June compared to May, thanks to higher shipments under oil-for-loan deals with China.
We expect bunker prices may change irregular today in a range of plus-minus 3-5 USD.