Asia fuel oil benchmarks slump as market prices in potential Iran war de-escalation
USO•Asian fuel oil benchmarks fell sharply as traders priced in the possibility of Middle East de-escalation and higher supplies. The 380-cst high-sulphur fuel oil crack fell from a $5.34-per-barrel premium to a $2.29 discount, while UAE exports to Singapore and Malaysia reached an eight-month high of 729,000 metric tons in October.
1. Benchmarks fall
Asian fuel oil benchmarks fell sharply this week as traders priced in higher Middle Eastern crude and fuel supplies and the possibility of de-escalation in the US-Israeli war with Iran. The Dubai-basis crack for 380-cst high-sulphur fuel oil closed Thursday at a $2.29-per-barrel discount, compared with a $5.34 premium at the start of the week, its lowest level since mid-September.
2. Supply and freight
Higher exports from the UAE’s Fujairah have added to regional supply, with fuel oil exports bound for Singapore and Malaysia totaling about 729,000 metric tons in October, an eight-month high. Total fuel oil arrivals in Asia exceeded 6 million tons in October, a seven-month high, but traders expect November arrivals to taper off. Elevated freight rates continue to restrict cargo flows from Europe to Asia: Rotterdam-to-Singapore dirty tanker rates eased to about $95 a ton this week from a record $168 a ton in mid-October.
