Fujairah is the world's third-largest bunkering location after Singapore and Rotterdam. Image Credit: Port of Fujairah

The Fujairah bunker market has largely been stuck on hold on Monday as traders wait for a clearer picture of the maritime security situation to emerge following the weekend's news from Iran.

Local sources speaking to Ship & Bunker on Monday reported some deal cancellations, but mostly described a market waiting for more news. The largely Dubai-based traders covering this market also have their own personal safety to worry about, with frequent explosions heard in the city over the weekend as drones were intercepted overhead.

Transits through the Strait of Hormuz by commercial shipping have dropped to a low level, driven in part by ship attacks over the past two days and more significantly by sharp increases in insurance costs for vessels operating in the area, and large numbers of ships are waiting in groups on both sides of the waterway. With the vast majority of Fujairah's demand coming from ships needing to cross this key chokepoint for global shipping, little in this market will change until more clarity emerges.

Fujairah is the world's third-largest bunkering location after Singapore and Rotterdam, with marine fuel sales of about 7.4 million m3 last year. Around 100-110 vessels normally cross the Strait of Hormuz per day, with that number dwindling to a handful since Saturday's strikes on Iran.

"As of now the majority of my clients are asking what to do in terms of placing orders," one trading source said.

"Will it get better, will it get worse - the crystal ball scenario.

"So far this morning I've just been receiving a lot of calls asking for advice, more than 100% cancellations."

Another source reported seeing some deals cancelled.

"We had two [cancellations] today ourselves, and one cargo delayed," the source said.

If demand does continue at Fujairah - and the vessels waiting outside the port will still need to consume at least some bunker fuel while there - one complication could be in getting more fuel to suppliers, which would typically come from the other side of the strait.

"Kuwait Petroleum VLSFO exports are stuck, so fuel oil cracks are high," the second source said.

"Vopak has stopped operations, and Fujairah Oil Tanker Terminals is doing it bit by bit.

"There's a lack of clarity for owners, operators and traders alike."

Sean Burgin, Middle East supply trading manager at Unicore Fuel, provided an update on his firm's view of the market in a webinar hosted by sister company GRM on Monday.

"For many it's business as usual, but for some, safety is paramount, and for their crew they have taken a decision to stop bunkering until further notice," Burgin said.

"We also see a number of suppliers not offering in the market today to ascertain where the situation will take us, both from a commercial aspect and of course, operationally and considering safety.

"At the moment, premiums we are seeing in the market are above $100/mt to the normal indexes when you compare to Platts, so there are significant increases and, in some cases, no pricing at all."