Alkagesta Market Insights: Hormuz Friction and Rhine Gridlock Squeeze Fuel Oil

Alkagesta's September commodity market insights describe the most volatile stretch of the year for the energy complex, following the breakdown of US-Iran talks and an escalation of military activity in the Middle East.

Attacks on tankers over the weekend of 5 and 6 September pushed Strait of Hormuz transit counts down to nine ships on 5 September and 14 the following day. In Europe, Rhine water levels at the Kaub chokepoint fell to 33 centimetres on 7 September, restricting barge drafts and threatening navigation on the Upper Rhine.

Front-month Dated Brent reached $100.835 a barrel by 4 September, more than $11 above the level of a week earlier, while ICE November Brent settled at $96.28 as paper markets priced in a lasting war-risk premium.

Physical fuel oil followed. FOB Singapore 0.5 per cent marine fuel was assessed at $764.08 a tonne on 7 September and 380 CST high-sulphur fuel oil at $588.15, while 0.5 per cent FOB Rotterdam barges rose to $634.75 a tonne. The Singapore Hi-5 spread widened to $174.89 a tonne as low-sulphur blending components stayed scarce.

Supply routing shifted sharply. Total fuel oil imports into Singapore rose 83 per cent week on week to 931,152 tonnes, yet arrivals from the Middle East fell 61.5 per cent to 43,539 tonnes as shippers avoided Hormuz, leaning instead on ship-to-ship transfers in the Gulf of Oman. Fujairah residual stocks dropped 15 per cent to a two-month low.

Demand held up: August bunker sales at Singapore edged 0.6 per cent higher to an estimated 4.70 million tonnes, with larger average stems and a 6 per cent rise in high-sulphur demand offsetting fewer bunkering calls. In Europe, closed arbitrage to Asia trapped coastal supply locally, while the shutdown of Switzerland's Cressier refinery trimmed regional flexibility.