Asia fuel oil benchmarks posted gains on Monday as sentiment turned cautious, with the market eyeing the impact of the broader U.S. sanctions on Russian producers and tankers.

High sulphur fuel oil (HSFO) margins edged higher, with Brent-basis cracks for 380-cst HSFO climbing to discounts near $4.25 per barrel, based on data from industry sources.

Meanwhile, backwardation spreads also widened at prompt months, including for very low sulphur fuel oil (VLSFO).

Price gains for spot fuel oil remain capped due to high supply inventories in the region, though the market is keeping an eye on the medium-term impact. Cash differentials for HSFO and VLSFO inched up on Monday, holding in thin premiums.

Separately, India’s HPCL offered five cargoes of HSFO for several loading dates in February and March. The tender closes on Tuesday.

SANCTIONS UPDATES

– U.S. President Joe Biden’s administration imposed its broadest package of sanctions so far targeting Russia’s oil and gas revenues on Friday.

– The Kremlin said on Monday that the latest round of U.S. sanctions on the Russian energy sector risked destabilising global markets, and Moscow would do everything possible to minimise their impact.

– Brent crude oil prices could rise above $85 a barrel in the short term if the latest round of U.S. sanctions against Moscow leads to lower Russian oil output, Goldman Sachs said.

– Chinese and Indian refiners will source more oil from the Middle East, Africa and the Americas, boosting prices and freight costs, as new U.S. sanctions on Russian producers and ships curb supplies to Moscow’s top customers, traders and analysts said.

OTHER NEWS

– Oil extended gains on Monday, with Brent crude rising above $80 a barrel to its highest in more than four months, driven by wider U.S. sanctions on Russian oil and the expected effects on exports to top buyers India and China.

– China’s crude oil imports fell 1.9% in 2024, data showed on Monday, the first annual decline in two decades outside of pandemic-induced falls, as tepid economic growth and peaking fuel demand dampened purchases.

– Turkish refiner Tupras is expected to restart a 151,000-barrel-per-day crude unit at its Izmir oil refinery in early February after a fire on Nov. 25, industry monitor IIR said.

– French oil major TotalEnergies has begun building a gas processing facility in Iraq, it said on Friday, the first portion of a massive multi-energy project aimed at reducing the country’s import bill and attracting foreign investment.

WINDOW TRADES

– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters