Saudi Arabia's state-controlled Saudi Aramco is offering October-loading high-sulphur fuel oil (HSFO) cargoes from within the strait of Hormuz, market participants said, adding that this is likely the first time the company has offered cargoes loading within the strait on a fob basis through a tender since the start of the US-Iran war.
Aramco is offering six cargoes, with three to load from Jubail and the other three from Ras Tanura. Participants suggested that Aramco's tender guarantees safe passage through the strait of Hormuz, with one trader noting that the company may have a dedicated shipping service provider for transit through the strait. This could not be directly confirmed, and market participants continue to remain sceptical about the possibility of safe transit, although there has been some headway made in US-Iran negotiations this week.
The cargoes are likely around 80,000-100,000t (516,000-645,000 bl) each, with market participants noting that the refiner could have offered up to 1mn t in total. The tender closed on 22 September with validity until 23 September. The HSFO from Jubail is expected to be cracked, while the Ras Tanura cargoes could include straight-run fuel oil, sources said. Straight-run fuel oil typically fetches a premium over cracked fuel oil, as it can be further processed to produce lighter, higher-value products.
Aramco does not usually offer fuel oil through tenders, with its trading arm typically handling such negotiations privately. It is also unclear why Aramco is choosing to offer cargoes on a fob basis now, especially after it previously awarded an unusual tender to offer fuel oil from Jubail on a delivered at port (dap) Singapore basis, market participants said.
The refiner likely offered two 80,000t cargoes for loading on 10-20 September and 21-30 September from Jubail, with the tender closing around 27 August, market participants said. Aramco may have offered additional cargoes, but this could not be confirmed, nor could the tender results. This could have been the first time Aramco has offered a tender on a dap Singapore basis, traders said.
Aramco could also be offering fuel oil from Fujairah and Oman, participants suggested, although this could not be confirmed. But Aramco has recently offered crude for loading via ship-to-ship in the Gulf of Oman, and fuel oil flows from Fujairah have been increasing recently, and most of these volumes are likely of the high-sulphur grade.
These flows could rise to around 200,000 b/d and beyond in September, marking at least a seven-month high, the highest since the US-Iran war started, data from global trade analytics firms Kpler and Vortexa show. Most of these volumes are currently set to head to Asia. Fuel oil from within the Mideast Gulf is also likely being shipped to tanks in Fujairah for blending before being re-exported, a trader said.
