Donna Dong
Research Analyst, Flux
Brent Rises to $103.92/bbl
Cambodia faces fuel shortages as imports shift; US plans SPR swap release with firms returning oil at premiums.
The May’26 Brent futures contract has risen this morning, from $100.49/bbl at 06:30 GMT to $103.92/bbl at 10:55 GMT (time of writing).
In the news, Cambodia is importing additional fuel from Singapore and Malaysia to compensate for supply shortages from Vietnam and China, as per Cambodian energy minister Keo Rottanak. He did not provide details on when supplies from Singapore and Malaysia would arrive. Cambodia, with no oil refineries of its own, has less than a month's supply of diesel, jet fuel, liquefied petroleum gas, and petrol under normal conditions. Since 11 Mar, about a third of the 6,300 petrol stations in the country (population ~18mn people) have closed; authorities are reportedly investigating whether businesses are stockpiling fuel in anticipation of further price increases. Vietnam and China have restricted fuel exports until at least the end of March to prevent potential domestic shortages. Elsewhere, the US's plan to release oil from the SPR depends on energy companies returning oil to the SPR with high premiums in the form of additional barrels. The US Department of Energy took bids from energy companies until late Tuesday this week for initial swaps totalling up to 86mb of oil - the results of which are expected to be announced in the coming days. Exchanges from the SPR are set to total 172mb, with oil companies expected to return about 200mb. The structure of the swap requires companies to pay back anywhere from 18% to 22% in oil, with the highest rate of 22% set for bidders who take sour crude and return sweet crude to the SPR. Finally, at the time of writing, the front-month and six-month Brent futures contracts stand at $4.38/bbl and $20.01/bbl, respectively.
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