• 2018 November 8 15:30

    Global fuel market is looking for some direction while Iran sanctions are in place: MABUX

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes have been falling during the week. Concerns about demand continue. The trade dispute between the United States and China threatens growth in the world’s two biggest economies and currency weakness is pressuring economies in Asia, including India and Indonesia. On the supply side, oil is ample despite the sanctions against Iran as output from the world’s top three producers - Russia, the United States and Saudi Arabia - is rising.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs), demonstrated firm downward trend in the period of Nov.01 – Nov.08:
        
    380 HSFO - down from 472.57 to 463.71 USD/MT (-8.86)
    180 HSFO - down from 518.71 to 511.79 USD/MT (-6.92)
    MGO         - down from 719.79 to 709.29 USD/MT (-10.50)


    Most of the world’s top oil trading houses expect oil prices to decline next year as slowing global economic growth and rising oil supply is expected to compensate Iranian crude export on the market. According to Vitol, oil markets are not that tight right now and a fair price of oil going into 2019 is probably closer to the $70 or $65 per barrel mark than the $85-$90 area. Vitol has now revised down its oil demand growth forecast for next year to 1.3 million bpd from 1.5 million bpd expected earlier. Trafigura in turn was the most bullish saying it wouldn’t be surprised to see oil hitting $100 per barrel by the end of next year. Gunvor thinks that oil prices will stay at current levels of around $75 a barrel Brent next year because producers are aware of the fact that higher prices would dent demand growth, which could lead to another glut.

    Goldman Sachs argues that the loss of supply from Iran, combined with thin spare capacity and resilient oil demand will push prices back up. The investment bank reiterated its forecast for Brent to hit $80 per barrel by the end of the year. As per Bank, oil demand is still growing at a brisk rate globally, and Chinese oil demand continues to surprise to the upside despite the ongoing activity slowdown. Goldman Sachs also argues that Iranian oil exports will still decline from here, despite the likely issuance of waivers by the United States to some importers. That means that prices might be hitting a temporary low provoked by the  implementation of U.S. sanctions on November 5, opening up upside potential thereafter.

    Iran's oil exports have fallen sharply since U.S. President Donald Trump said at mid-year he would re-impose sanctions on Tehran, but taking waivers into consideration major buyers are already planning to scale up orders from Iran again. The original aim of the sanctions was to cut Iran's oil exports as much as possible, to quash its nuclear and ballistic missile programs, and curb its support for militant proxies, particularly in Syria, Yemen and Lebanon. The exemptions, however, granted to Iran's biggest oil clients - China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey - which allow them to import at least some oil for another 180 days, could mean the exports start to rise after November. This group of eight buyers takes as much as three-quarters of Iran's seaborne oil exports.

    Meantime, the waivers are temporary, with Washington expecting the countries on the list will gradually reduce their imports of Iranian crude. In addition, the U.S. has asked its partners to reduce trade in other goods, not covered by the sanctions, with Iran to maximize the pressure. China in turn has already claimed that it would continue its trade with Iran and oppose the U.S. sanctions on the Islamic Republic as unilateral and long-arm jurisdiction.

    Iran from its part said that besides threats to close off the Strait of Hormuz, there is simply not enough spare capacity in the world to make up for lost Iranian supply, which would mean price spikes that would not be to the liking of Washington or its.

    OPEC and the U.S. are together adding enormous volumes of new supply, which together have softened the oil market. In October, OPEC hiked oil production to the highest level since 2016.  The higher output, led by Saudi Arabia and the UAE, come just as Iranian oil is going offline. Also, Libya saw a sharp rebound in production, although the country is not part of the OPEC+ production cuts.

    The 15 countries in OPEC produced an average 33.31 million barrels per day in October, the highest since December 2016. Russia, which is not part of OPEC but part of the OPEC+ coalition, continues to produce at post-Soviet record highs. Iran lost 100,000 bpd in October, due to buyers cutting back because of U.S. sanctions, but the losses were more modest than many forecasts had expected. The U.S. is also adding supply at an impressive rate. The EIA estimates that the U.S. produced 11.346 million bpd in August, an increase of 416,000 bpd from a month earlier. That level makes the U.S. the largest oil producer in the world.

    It was reported a 1-rig decrease for oil and gas in the United States last week, bringing the total number of active oil and gas drilling rigs to 1,067, with the number of active oil rigs decreasing by 1 to reach 874. The oil and gas rig count is now 169 up from this time last year. EIA’s estimates for US production for the week ending November 02 were for an average of 11.6 million bpd, a new record.

    Rather than accept proposals designed to ease the shift from 3.5% to 0.5% sulphur in marine fuel from January 1, 2020, the IMO instead tightened compliance on Oct.26 by adopting a ban on the carriage of non-compliant fuels in ships without exhaust scrubbers. Various estimates suggest IMO 2020 will involve a transfer in value of over $1 trillion between 2020-25. On the winning side: refiners, low sulphur crude producers, oil-fired power generators and some industrials; on the losing side, freight carriers, high sulphur crude producers and consumers.

    The change in specifications is global. Bunker fuel usage is around 5-6 million bpd, roughly 6-7% of the world oil market. Not only that but 0.5% sulphur fuel oil is a new product. Refiners have to reconfigure their kit to produce it, while ship owners will be running it through engines unused to the new specifications.

    All in all, global fuel market is looking for some direction now that Iran sanctions are in place. We expect bunker prices may turn into irregular fluctuations next week.

     

     

     

     

     

     

     

     

    All prices stated in USD / Mton
    All time high Brent = $147.50 (July 11, 2008)
    All time high Light crude (WTI) = $147.27 (July 11, 2008)




2019 January 20

16:08 Subsea 7 acquires multi-purpose offshore construction and dive support vessel
15:03 TEPCO and Ørsted sign MoU to work jointly on offshore wind projects
13:51 Major contract for JSS awarded to Montreal-based company
12:42 Huntington Ingalls Industries to acquire Fulcrum IT Services
10:47 Algoma provides update on status of fleet renewal

2019 January 19

16:19 Ocean Yield acquires Suezmax tanker Milos for $56.0 million
15:16 Evac expansion continues with acquisition of UK service company Transvac Systems
14:02 Deltamarin contracted to continue with Titanic II project
12:51 SGRE launches 10 MW offshore wind turbine
11:44 Algoma increases its interest in the ocean self-unloader Pool

2019 January 18

18:06 North Carolina Ports sets new record in 2018
17:47 Freight turnover of Neva-Metal (Saint-Petersburg) in 2018 climbed by 3% Y-o-Y to about 3.2 million tonnes
17:25 Okskaya Sudoverf obtains patent for state-of-the-art pontoons
17:06 Hamburg prepares for ‘Hard Brexit’
16:44 Throughput of port Primorsk in 2018 fell by 7% Y-o-Y to 53.48 million tonnes
16:23 GTT receives a new order from SHI to design the tanks of two LNG carriers on behalf of Gaslog
16:20 NOVATEK elects new Board of Directors
15:56 Throughput of port Vyborg in 2018 grew by 25% Y-o-Y to 1.93 million tonnes
15:33 Stena Line’s first new generation ferry ‘floats’ in China
15:21 Bunker sales at the port of Singapore in 2018 fell by 1.7% Y-o-Y to 49.8 million tonnes
15:03 Panama Direct service CMA CGM to resume weekly rotations
14:47 Throughput of port Vysotsk in 2018 climbed by 7% Y-o-Y to 18.79 million tonnes
14:33 GranIHC appointed contractor for Equinor’s Peregrino Phase II Project
14:19 Port of Ust-Luga handled 98.72 million tonnes in 2018, down 4% Y-o-Y
14:03 Algoma Central Corporation increases its interest in ocean self-unloader Pool
13:50 18 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on January 17-18
13:35 Throughput of the Port of St. Petersburg in 2018 up 11% Y-o-Y to 59.32 million tonnes
13:18 CMA CGM unites its Containerships and MacAndrews brands
13:11 Vladimir Putin supports Government’s proposal on expanding Far East Ministry’s functions with Arctic issues
12:49 Throughput of port Kavkaz in 2018 grew by 11% Y-o-Y to 49.276 million tonnes
12:26 MV Werften purchases Neptun Ship Design
12:08 Sakaide shipyard holds naming ceremony for new LNG carrier jointly owned by NYK and JERA
11:38 PGNiG SA signs agreement for oil and gas exploration and production in UAE
11:14 Remote pilotage to be allowed in Finland
10:47 Free zone status is a crucial advantage for the future development of the Freeport of Riga
10:06 Ice restrictions at the port of Ust-Luga come into effect on January 31
09:42 Brent Crude futures price up 0.9% to $61.73, Light Sweet Crude – up 1.09% to $52.64
09:20 Baltic Dry Index is up to 1,077 points

2019 January 17

18:13 PORT OF KIEL presents annual results 2018
17:51 Ice restrictions at the port of Primorsk come into effect on January 25
17:28 Global Ports sets up a common service call centre
17:09 EFIP welcomes and supports the European Parliament position on the Connecting Europe Facility for 2021-2027
17:05 North Sea Port monitoring the Brexit closely
16:44 ABP invests £700K to boost storage at Port of Ipswich
16:27 Global fuel market: still many uncertainties in both demand and supply
16:22 CMA CGM announces FAK rates from ISC to North Europe and the Mediterranean
16:05 OCEAN Alliance extends duration of OCEAN Alliance to ten years
15:42 COSCO SHIPPING Ports signs agreement with PSA to add two new berths at the terminal in Boao, Hainan
15:31 Liebherr supports the 6th International Forum of Dredging Companies as its Sponsor
15:02 Ocean Yield ASA agrees to acquire a modern Suezmax tanker for a consideration of USD 56.0 mln
14:02 SEACOR Marine enters agreement to acquire three additional platform supply vessels from affiliates of COSCO Shipping Group
13:49 Throughput of Chinese ports grew by 4.2% to 9.22 billion tonnes in 2018
13:32 Jensen Maritime provides design for Shaver Transportation’s new tugboat
13:14 OOCL rolls out third phase of Ocean Alliance product refinements
12:50 Baltic Ports Organization’s schedule for 2019 is set
12:38 Port of Los Angeles breaks all-time cargo record in 2018
12:26 Qatar accedes to load lines convention
12:01 Sunseeker International and Rolls-Royce to present first production yacht with MTU hybrid power in 2020
11:51 Bunker prices continue going down at the Far East ports of Russia (graph)
11:38 Port of Zeebrugge handled 40.1 million tonnes in 2018