Regional bunker benchmarks have mostly gained, and US dockworkers have called off their strike action.

Changes on the day to 08.00 CDT (13.00 GMT) today:

• VLSFO prices up in Los Angeles ($23/mt), Houston ($20/mt) and Balboa ($17/mt), and down in New York ($12/mt) and Zona Comun ($3/mt)
• LSMGO prices up in Los Angeles ($27/mt), New York and Balboa ($24/mt), and Houston ($11/mt)
• HSFO prices up in Balboa ($19/mt), Los Angeles ($18/mt), Houston ($16/mt) and New York ($4/mt)

US dockworkers and port operators reached a tentative agreement yesterday to suspend a massive strike. They are continuing negotiations.

Several US ports are gradually returning to normal operations after nearly three days of disruption. Port of Houston Authority announced that it will be soon “re-opening Port Houston’s Bayport and Barbours Cut Container Terminals swiftly and safely.” All container operations in these terminals were suspended due to the strike action by dockworkers.

New York’s Hi5 spread has shrunk to just $6/mt now, sharply down from $47/mt a week ago. The port's HSFO price has risen by a steep $47/mt over the past week, while its VLSFO price has increased by a modest $6/mt. VLSFO supply has been ample in the port with some suppliers able to supply the grade within five days. Readily available supply has contributed to cap New York’s VLSFO price gain, a trader said.  

New York’s VLSFO price premium over Houston’s has narrowed from $57/mt a week ago to average $17/mt today.

VLSFO and LSMGO availability is normal in Houston. Lead times of 5-7 days are generally recommended for both grades in the port. Overall, bunker demand has been low in the US Gulf Coast port so far this week, a trader said.

Brent

The front-month ICE Brent contract has increased by $2.63/bbl on the day, to trade at $78.11/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Oil rallied as tensions continued to escalate in the Middle East. The conflict has now dragged in OPEC’s second-largest oil producer, Iran.

Brent’s price surged following reports that Israel’s next target could be Tehran’s oil and energy facilities, market analysts said.

“Oil prices skyrocketed… as investors scrambled for cover amid the brewing chaos in the Middle East,” SPI Asset Management’s managing partner Stephen Innes said.

The Pentagon and the Israel Defense Forces (IDF) are “discussing” possible airstrikes on Iranian oil infrastructure in response to Tehran’s missile attack earlier this week, US President Joe Biden said.

In a clip shared by Reuters, when asked if Washington would back an Israeli attack on Iran’s oil facilities, Biden responded, “We are discussing that.”

“Brent crude rose… on the news [that Israel could strike Iranian oil sites] as markets start to price in the likelihood of supply disruptions in the Middle East,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

“The region accounts for about a third of global supply,” Hynes added.

Downward pressure:

Brent’s price felt some downward pressure as Libya’s state-owned oil company National Oil Corporation (NOC), which oversees most of the country's oil resources, officially lifted force majeure on oil production and exports yesterday.

Crude oil production in the Sharara and El-feel oilfields, two of the largest Libyan oil production sites, and exports from Essider have resumed, NOC said in a statement.

The news comes as OPEC+ plans to proceed with production hikes in December, a move that will push the global oil market into over-supplied territory, according to market analysts.

Libya has a production capacity of about 1.2 million b/d, according to OPEC.

By Nithin Chandran and Aparupa Mazumder

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