Donna Dong
Research Analyst, Flux
Brent Strengthens Above $104/bbl
Fujairah halts oil loadings after attack; Trump urges allies to secure Hormuz as Iran conflict disrupts trade.
The May’26 Brent futures contract has strengthened this morning, opening at $102.27/bbl and strengthening to $104.39/bbl at 10:00 GMT (time of writing).
In the news, the UAE’s key oil export port, Fujairah, has suspended oil loadings following another attack on its infrastructure. According to a Bloomberg report, the suspension was described by sources as “precautionary” as damage assessments continue. In related news, US President Trump has demanded that American allies help secure the Strait of Hormuz as Iran continues its attacks on the waterway. In an earlier social media post, Trump stated that he hoped that China, France, Japan, South Korea, Britain, and others would lend assistance. Japan and Australia have since said they were not planning to send navy vessels to the Middle East to escort ships through the Strait. On Sunday (15 Mar), Trump told the Financial Times that he expects China to help unblock the Strait of Hormuz before his scheduled meeting with Chinese President Xi at the end of March; he claimed that he “may delay” if China did not offer its support. The Chinese foreign ministry has not yet responded to this comment. Elsewhere, Vietnamese authorities have cautioned the country's aviation sector to brace for possible flight reductions starting in April, following China and Thailand’s cessation of jet fuel exports due to the Iran conflict. Vietnam imports more than two-thirds of its jet fuel requirements, with 60% coming from China and Thailand. In other news, China’s Sinopec (average processing rate 5.2mb/d) has reduced its run rates by 10% in response to the Iranian war, according to a Bloomberg report. The refiner imports roughly 50% of its processing crude from the Middle East, making it highly susceptible to supply shocks in the region. Unnamed sources said there will also be additional output losses from maintenance operations. Finally, at the time of writing, the front-month (May/Jun) and 6-month (May/Nov) Brent futures spreads are at $4.65/bbl and $20.94/bbl, respectively.
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