27 Apr 2022 | 16:57 UTC

Russian supply enables Greece to offer cheapest HSFO bunker fuel in Med

Highlights

Piraeus becomes cheapest HSFO hub in Mediterranean

Greek HSFO imports from Russia jump 140% on week

Hi-lo spread narrows in Greece while low sulfur premiums rise

Piraeus was offering the cheapest HSFO bunker fuel in the Mediterranean, with supplies in the Greek port boosted by a surge in Russian imports, Kpler shipping data showed.

High sulfur fuel oil bunker fuel prices fell 11% to $625/mt in Piraeus April 26, pricing $152/mt below Istanbul and $93/mt below Gibraltar. Across the Mediterranean, prices were only assessed lower in the Russian Black Sea port of Novorossiisk, which has been shunned by most market participants.

In Singapore, often the preferred bunkering hub for ships crossing the Suez, prices were assessed 20% higher at $750/mt.

"Piraeus is more convenient for high-sulfur fuel than other ports in the Mediterranean at the moment," said one Italian trader, who noted that other bunkering hubs remained severely undersupplied.

According to Kpler shipping data, Greece received an influx of Russian product on the week beginning April 18, importing 720,000 barrels of high sulfur fuel oil, up 140% week on week.

"It's the worst kept secret that Greece is still taking Russian material," said one shipping source.

The Piraeus port authority could not be reached for comment.

While traders in neighboring Istanbul also reported healthy supply, demand has been hit by a drop-off in Ukrainian shipping and an aversion to Black Sea shipping routes due to high 'war risk' insurance premiums.

Kpler data showed Greek material flowing to elsewhere in Europe, notably Spain and the Netherlands, while other barrels found homes further afield in Saudi Arabia and the US.

Very low sulfur fuel oil prices in Piraeus also fell 8.6% from $1,007/mt to $920/mt, reaching 40-day lows.

The softening in high-sulfur prices caused the hi-5 spread -- the premium for 0.5% sulfur bunker fuel over 3.5% fuel oil -- to slump 20.9% from April 22 levels. The spread narrowed to $295/mt April 26, falling from one-month highs of $432/mt early last week.

Elsewhere in the Mediterranean, the hi-5 spread has widened as very low sulfur stocks tightened, causing shipping companies to weigh scrubber economics against availability concerns.