Donna Dong
Research Analyst, Flux
Brent Declines to $98.80/bbl
Brent falls as Gulf refining outages hit supply; Urals surges on demand while shippers add fuel surcharges and traders secure financing.
The May’26 Brent futures contract has fallen this afternoon, from $93.71/bbl at 12:30 GMT to $87.77/bbl at 16:40 GMT (time of writing).
In the news, consultancy IIR estimates that nearly 1.9 mb/d of crude oil refining capacity in the Arabian Gulf has been shut down due to the US-Israeli war on Iran. This covers outages in Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates. Elsewhere, container shipping group AP Moller-Maersk announced a temporary emergency bunker surcharge (EBS) due to soaring fuel costs. The EBS is scheduled to be implemented globally from 25 Mar onwards and remains subject to regulatory approvals; the surcharge will be monitored bi-weekly and adjusted if needed based on fuel availability, cost, and mix. In Russia, the price of Russian Urals crude oil has risen amid the Middle Eastern conflict, up from $45/bbl to $76/bbl on 09 Mar as attention turns to the previously shunned crude grade. Urals for delivery to Indian ports is now selling at a premium to Brent for the first time on record. In other news, India’s Reliance Industries has said it will maximise LPG production and divert locally produced natural gas to priority sectors. The nation, which imports most of its LPG and LNG from the Middle East, had previously asked its refiners to boost LPG production to offset any shortage of cooking gas. Geneva-based trading house Trafigura has additionally obtained a $3 billion credit facility to safeguard against sudden fluctuations in commodity prices. Finally, at the time of writing, the front-month (May/Jun) and 6-month (May/Nov) Brent futures spreads are at $3.16/bbl and $12.79/bbl, respectively.
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