Fujairah Bunker Market Facing Headwinds from "Flood" of Iranian Oil

Aegean President E. Nikolas Tavlarios

The bunkering market in Fujairah is "facing headwinds due to low prices and Iranian oil which has flooded the market with supply," according to E. Nikolas Tavlarios, President at Aegean Marine Petroleum Network Inc. (Aegean) [NYSE:ANW].

The comments came as part of an update on the bunker supplier's Fujairah operations during its latest earnings call, following last week's release of its 2015 Q4 and FY2015 financials.

Despite the "headwinds", Tavlarios said its Fujairah Oil Terminal "continues to operate at strong efficiency levels and is now performing at 100 percent capacity. The current market structure continues to be favourable for our storage business.

"We believe this market will return to equilibrium and remains an important part of our global supply network."

Looking at the global markets as a whole, Tavlarios noted that despite the recent uptick in prices, ultimately the volatile, low price environment will persist.

According to Ship & Bunker data, the Average Global Bunker Price for key grade IFO380 has fallen around 60 percent over the last 12 months, and on Friday sat at an average of $208 per metric tonne (pmt) across all world ports, but has risen $18.50 pmt over the last month.

"We maintain that the fundamentals that caused the oil price to fall more than $60 per barrel are still very much in play, and we expect prices to remain low and volatile in the near term," he said.

"In regards to the marine fuel environments for 2016, we see market conditions improving slightly as incremental demand growth outpaces incremental supply growth throughout the second half of the year."

Looking to the shipping markets, Tavlarios said the outlook for dry bulk remains uncertain, and along with container shippers they face "serious near-term headwinds" which created a more cautious sales environment for the company.

Tankers, car carriers, and cruise operators, however, were seen as having "very positive near-term dynamics."

Tavlarios also touched on the continuing fallout from the collapse of OW Bunker, and in particular the impact of the so-called "double payment" scenarios that some buyers are now facing.

"[Bunker buyers] were put at risk of having to pay their bunkering bill twice, where they pay the trader and then they pay the physical supplier. So the value that Aegean brings in a direct relationship is quite meaningful," he said.

Ship & Bunker reported earlier today that stock analysts last week were bullish on Aegean's Prospects.