Kuwaiti state-controlled refiner KPC has exported very-low sulphur fuel oil (VLSFO) from its 615,000 b/d Al-Zour refinery, with the cargo making it through the strait of Hormuz this week.
KPC likely loaded around 100,000t (645,000 bl) of VLSFO from al-Zour on the Luckyride around 29 August and the vessel is currently heading to Singapore after making it through the strait of Hormuz, according to global trade analytics firms Kpler and Vortexa. This could be al-Zour's first loading in around six months since the US-Iran war started, showed shiptracking data, but this could not be confirmed.
The firm offered the cargo sometime this week for delivery to Singapore, traders said, adding that bids started at around a premium of $69/t to the Singapore 0.5pc sulphur marine fuel spot assessments. The cargo has likely been awarded, but the results could not be confirmed.
This export is in line with market expectations that al-Zour would start offering exports in end-August or September, as the peak demand season of summer ends, with the country typically using VLSFO for domestic power generation. Power demand has been relatively firm this year, especially as geopolitical tensions in the Mideast Gulf have weighed on travel activity, a Kuwait-based source noted.
The last time KPC loaded cargoes from al-Zour could have been in March, showed shiptracking data. But some of these volumes only made their way out of the strait of Hormuz around June, after the US and Iran signed a memorandum of understanding to end the conflict, which also prompted KPC to lift all its previously issued force majeure notices.
The earlier loaded volumes include the Marlin Santorini which loaded around 28 February, and the Nordic Vega which loaded around 2 March. Notably, the Nordic Vega conducted a ship-to-ship transfer with the Ottoman Sincerity and exited the strait of Hormuz around end-June to head to the Singapore strait. Shipping fixtures had showed KPC chartering the Ottoman Sincerity to take 145,000t of fuel oil to Singapore for $1.4mn.
KPC's VLSFO cargo will bring some relief to the persistently tight market in Singapore, although participants are expecting more arbitrage arrivals from mid-September onwards, with the currently wide east-west spread incentivising more flows here. The spread has mostly remained above $70/t since mid-July and briefly hit a one-month high of $99/t on 31 August.
