Asia fuel oil benchmarks posted gains on Monday as sentiment turned cautious, with the market eyeing the impact of the broader U.S. sanctions on Russian producers and tankers.
High sulphur fuel oil (HSFO) margins edged higher, with Brent-basis cracks for 380-cst HSFO climbing to discounts near $4.25 per barrel, based on data from industry sources.
Meanwhile, backwardation spreads also widened at prompt months, including for very low sulphur fuel oil (VLSFO).
Price gains for spot fuel oil remain capped due to high supply inventories in the region, though the market is keeping an eye on the medium-term impact. Cash differentials for HSFO and VLSFO inched up on Monday, holding in thin premiums.
Separately, India’s HPCL offered five cargoes of HSFO for several loading dates in February and March. The tender closes on Tuesday.
SANCTIONS UPDATES
– U.S. President Joe Biden’s administration imposed its broadest package of sanctions so far targeting Russia’s oil and gas revenues on Friday.
– The Kremlin said on Monday that the latest round of U.S. sanctions on the Russian energy sector risked destabilising global markets, and Moscow would do everything possible to minimise their impact.
– Brent crude oil prices could rise above $85 a barrel in the short term if the latest round of U.S. sanctions against Moscow leads to lower Russian oil output, Goldman Sachs said.
– Chinese and Indian refiners will source more oil from the Middle East, Africa and the Americas, boosting prices and freight costs, as new U.S. sanctions on Russian producers and ships curb supplies to Moscow’s top customers, traders and analysts said.
