Bunker benchmarks have moved in mixed directions, and bunker operations have been suspended because of high seas in GOLA.

IMAGE: Aerial shot of a cargo ship loaded with containers docked in the Port of Long Beach. Getty Images

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

• VLSFO prices up in Balboa ($5/mt), Houston ($3/mt), Zona Comun ($2/mt) and New York ($1/mt), and down in Los Angeles ($6/mt)
• LSMGO prices up in Balboa ($5/mt), Houston and Los Angeles ($2/mt), and down in New York ($10/mt)
• HSFO prices up in Balboa ($4/mt) and Los Angeles ($2/mt), and down in Houston and New York ($1/mt)

Houston's VLSFO and LSMGO prices have increased after two stems were booked and put upward pressure on the benchmark. A 500–1,500 mt VLSFO stem was fixed at $483/mt, and another 150–500 mt LSMGO stem was fixed at $642/mt.

Houston’s VLSFO benchmark is currently at a $29/mt premium over Port Arthur, and $22/mt discounts to both New York and New Orleans.

As the 90-day tariff pause between the US and China takes effect today, Xeneta's chief analyst Peter Sand said, "Carriers responded to falling volumes from China to the US by slashing container shipping capacity and redeploying it onto other trades, such as the Far East to Europe."

"It takes time to shift capacity back again, so a revival in volumes from China to the US may mean shippers have to pay a little over the odds in the short term," Sand added.

Bunker operations, which had resumed in the Galveston Offshore Lightering Area (GOLA) last Thursday, have been suspended again.

"Prolonged delays are expected over the next 48 hours due to rough sea conditions and bunker deliveries will proceed only where local conditions permit," a source said.

In Zona Comun, deliveries are also expected to be halted by strong winds exceeding 20 knots.

Brent

The front-month ICE Brent contract has gained $0.45/bbl on the day, to trade at $66.09/bbl at 08.00 CDT (13.00 GMT).

Upward pressure:

Tighter US sanctions on Iranian oil have supported Brent’s price gains today. The US government has sanctioned two vessels and nearly two dozen firms, for allegedly transporting Iranian oil.

These vessels and their owners facilitated transport of oil and petroleum products on behalf of Iran’s Armed Forces General Staff (AFGS), according to the US Department of the Treasury’s Office of Foreign Assets Control (OFAC). One of the “key catalyst” to oil prices “is the threat of further sanctions on Iranian oil exports,” two analysts from ING Bank remarked.

US President Donald Trump has also warned that Washington will exert maximum pressure on Tehran’s oil exports if a nuclear deal with the OPEC+ member is not reached soon, according to market reports.

Trump’s announcement was “backed up by the US State Department, which said that it’s sanctioning an international network facilitating the shipment of Iranian crude to China,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

However, some of the losses in the global oil market from the clampdown on Iranian oil exports may be offset by increased output from the OPEC+ alliance.

In April, the Vienna-headquartered group surprised the oil market by tripling its planned production hike to 411,000 b/d for May and agreed to extend that increase through June – the second month in a row. The group plans to expedite the unwinding of its 2.2 million b/d output cut.

“Expectations are rising that Saudi Arabia may push for another acceleration of production hikes the group have already approved,” Hynes added.

On the demand side, Brent’s price felt some downward pressure after the American Petroleum Institute (API) reported a sizeable increase in US crude stocks.

US crude oil inventories rose by 4.3 million bbls in the week ending 9 May, according to API estimates. The data has surprised market analysts as they predicted a draw in US crude stocks.

The API numbers were “very different from the roughly 2m [2 million] barrel draw the market expected,” ING Bank analysts noted.

A buildup in inventories typically signals weaker oil demand, which can put downward pressure on Brent's price.

By Gautamee Hazarika and Aparupa Mazumder

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