A strong premium to Brent seen in the middle of 2022 has now firmly moved to a discount. Image Credit: Ship & Bunker
VLSFO prices in Singapore, the world's largest bunkering hub, have dropped to the lowest level since the start of 2022 this week.
VLSFO delivered in Singapore stood at $647/mt on Monday, according to Ship & Bunker data, the lowest level since January 7.
The VLSFO price was at an $11.50/mt discount to Brent crude futures, compared with an average premium of $70/mt this year.
The discount to Ship & Bunker's G20-VLSFO Index of prices across 20 leading bunkering ports was $40.50/mt, compared with this year's average discount of $16.50/mt.
Oil markets in general are in retreat amid nerves over a potential global recession. But Singapore's VLSFO market in particular is under pressure both from refineries maximising distillate output and creating a glut of residual products, and by more Russian fuel oil arriving in the Asia-Pacific market as Europe seeks to phase out its Russian oil imports.