NSI: How to Approach Surging Bunker Markets in Ukraine Crisis

by Paul Hardy, NSI
Thursday February 24, 2022

We have been running through various scenarios this morning. In the latest of a series of four messages to our clients this morning, what follows is the consensus among us on the the most likely course of events:

  1. Suppliers in the main markets will avoid buying new cargo when the market is so volatile. This will be exacerbated in markets where still a number of suppliers remain unhedged.
  2. In about seven days' time we should see some shortages in the bunker market as existing cargo is run down.
  3. In about 14 days' time the very large cargo traders and producers will most likely have excess stock and will be forced to reduce cargo premiums to start it moving. This will translate into lower bunker premiums

What I can't do is predict what will happen with the overall geopolitical situation. There was an interesting point made this morning that in the short term we may see further strengthening this afternoon as US day traders pile into oil and out of stocks.

On the bunker side there are many suppliers not quoting due to the volatility. Those that are have very, very, short validities due to the need to hedge out any particular sales.

We are expecting increased activity for bunkering in areas like Skaw and Istanbul and have updated avails info on all suppliers. Please contact your broker for the current situation.

Let's see what this afternoon brings.

About NSI

NSI

Nautical Supply International Ltd is the largest fully independent broking house. It has extensive experience on the spot, term and hedging markets. It advises on short and long term bunker strategy with a focus on compliance and flexible pricing methods for a portfolio of blue chip clients.

Paul Hardy can be reached at paul@nauticalsupply.co.uk

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