An acute supply crunch resulting from the US-Iran war has left the UAE port of Fujairah, the world's fourth-largest bunkering port, depleted of very-low sulphur fuel oil (VLSFO).
Most major bunker suppliers in Fujairah have completely pulled out of the market, reporting zero availabilities for the rest of the first half of June.
The US-Israel war with Iran has severely disrupted local VLSFO production by cutting imports of feedstock materials and has severed supply from Kuwait's 615,000 b/d al-Zour refinery, leaving remaining bunkering volumes barely able to meet even very slim demand.
"Nothing is moving here and will stay the same until we get a cargo from somewhere," a major bunker supplier said.
Argus-assessed spot premiums for delivered VLSFO rose to all-time highs of $500-700/t against front-month Singapore VLSFO cargo values in the first week of June. In the neighbouring port of Khor Fakkan, where some sellers still have scarce supplies, a supplier sold a cargo on 8 June at a $450/t premium to the price basis. Under normal market conditions, bunker premiums typically hover around $10–20/t.
But market participants anticipate some near-term relief with an expected arrival of low-sulphur straight run residuals (LSSR) in mid-June.
A 100,000t cargo of LSSR from Nigeria's Dangote refinery, on board the Indonesia Prosperity, is scheduled to arrive in Fujairah on 16 June, according to global trade analytics firm Vortexa. The vessels charterer is trading firm Vitol, who owns a 100,000 b/d refinery in Fujairah.
"It will take few days for LSSR to be blended into marine fuel grade VLSFO," one bunker trader said. "Vitol has its own bunkering arm in Fujairah which will have a priority for access over other suppliers."
The volume of VLSFO sales in deals collected for assessment by Argus fell to a record low of 1,085 t/d in May, down from 1,760 t/d of sales in April.
Argus compiles daily data on deals from Fujairah suppliers, traders and buyers, capturing up to a quarter of the market, offering a snapshot of broader market trends.
