Kuwait’s Al Zour refinery has issued a spot sales tender offering very low sulphur fuel oil (VLSFO) for the first time in more than three months, trade sources said on Thursday.

Prices of VLSFO immediately softened in Asia after the tender emerged, sources said.

Tenders from Al Zour are closely watched by market participants as the refinery is poised to be a major global exporter when it ramps up to full commercial capacity.

The refinery issued the tender on Thursday offering 130,000 metric tons of VLSFO with maximum sulphur content of 0.5%.

The cargo is expected to load between Jan. 20 and 21, while the tender closes on Friday.

Singapore’s 0.5% VLSFO cash premium MFO05-SIN-DIF fell to $3.75 a metric ton on Thursday, approaching a four-month low, while front-month cracks edged lower to premiums of about $12 a barrel.

The Al Zour refinery had previously closed a term tender in November last year, offering VLSFO for loading between January and June this year, but spot tenders have been quiet for several months, trade sources said.

Prices of VLSFO are expected to hinge on exports from Kuwait’s Al Zour refinery this year, as the market awaits its ramp up to full capacity for commercial exports later this year.

Kuwaiti exports of VLSFO have climbed in the first nine months of 2023 as the refinery increased spot sales, but fell in the fourth quarter after it decided to sell production via term instead of spot tenders.

Once fully operational, VLSFO exports from the refinery could meet 8% to 10% of Asia’s demand if the supplies flow east, based on estimates from industry sources.
Source: Reuters (Reporting by Jeslyn Lerh; editing by Jason Neely and Elaine Hardcastle)