The global marine fuel market (Bunker) faced geopolitical pressures and supply constraints in October 2023. Tensions in the Middle East, disruptions in oil flows, fuel shortages in the region, and rising LNG prices contributed to the strengthening of fuel prices.
Impact of Middle Eastern Tensions on Fuel Prices
Ongoing tensions around the Strait of Hormuz have increased geopolitical risks and raised transportation costs and fuel price volatility. Additionally, disruptions in Gulf oil exports, limitations in supply flexibility, and rising transportation costs have created upward pressures on crude oil and marine fuel prices.
Price Volatility in the Marine Fuel Market
In October, the MABUX 380 HSFO index increased by $76.75 to $778.42 per ton. Additionally, the VLSFO index rose by $70.81 to $913.07 per ton, surpassing the $900 mark. In contrast, the MGO LS index experienced only a slight increase of $2.62, reaching $1,524.50. This price increase was primarily due to the escalation of military conflicts between the United States and Iran, as well as a significant rise in geopolitical risks affecting global crude oil and refined product prices.
In October, the price difference between 380 HSFO and VLSFO also decreased by $5.94 to $134.65, while the monthly average fell by $23.78. In Rotterdam, this price difference increased by $11.00 to $68.00, but in Singapore, it decreased by $35.00 to $90.00. This trend reflects the alignment of the fuel market with the prevailing geopolitical conditions.
Status of Natural Gas Reserves in Europe
Natural gas prices in Europe have surged due to prolonged disruptions in LNG supply caused by conflicts in Iran and transportation constraints from the Strait of Hormuz. As of October 29, the level of underground natural gas reserves in Europe reached 74.89% of total capacity, which is 3.63% higher than 71.26% at the end of September. This represents a 13.43% increase compared to the beginning of the year, although it is still lower than the same level last year.
The TTF natural gas index in Europe also rose in October, increasing by €24.650 to €98.588 per MWh. This price increase is driven by increasing competition for alternative cargoes and seasonal demand, and prices are expected to remain high throughout the winter.
Read more: Increase in Heavy Fuel Prices in Singapore Due to Supply Disruptions
