After the Mideast disruption, Asia receives its first Mexican fuel oil shipment in 9 months.
According to industry sources, and shipping data, Asia received its first cargo of fuel oil?from Mexico?in nine months?on Thursday. More cargoes are expected to follow.
After the Strait of Hormuz conflict, which cut off fuel oil supplies to key Middle East exporters like Iraq and Kuwait due to the Iran conflict, the incoming cargoes of Mexico will help Singapore's trading hub and bunkering center ease concerns over declining inventories.
According to Kpler and traders, the Suezmax tanker Orion has landed in Singapore on 7 May with about 160,000 metric tons of high-sulfur fuel oil (HSFO), loaded from the Salina Cruz Refinery on the Pacific Coast.
PMI, the Mexican energy company Pemex's trading arm, has offered to deliver another 150,000 tons of HSFO cargo in June via a tender which closed on the 6th May - with bids valid up until the 8th May, according to a Singaporean trader who is familiar with the issue. PMI will award the bid later this Friday.
Fuel oil traders say that high Asian prices are driving cargoes towards Asia, while the Americas have an excess of supply. Emril Jamil is a senior analyst at LSEG and he said that Mexican fuel barrels are looking for a more economic solution due to the influx of Venezuelan crude oil to the US Gulf Coast.
Kpler data showed that the majority of Mexico's exports of fuel oil are usually shipped to the U.S.
Pemex or its trading arm did not immediately respond to a comment request. After the Middle East disruption, traders in Asia are looking for arbitrage supplies.
LSEG data shows that the arbitrage has opened with front-month 380cst HSFO West-East?spread near $60 a metric ton in this week. This is more than twice as much as before?the?conflict.
Data showed that the spread reached $80 per ton after the Middle East conflict on 9 March, a level last seen in September 2019.
It is more appealing to ship cargoes from the West to Asia when the East-West price spread is wider. This measure the difference in the cost of?Asian oil against the supply from North America and Europe. Reporting by Jeslyn Eschenbacher and Florence Tan in Mexico City, and editing by Stephen Coates and Florence Tan.
(source: Reuters)
