Fujairah’s Hi5 spread widens as VLSFO remains scarce

The Hi5 spread in Fujairah has expanded significantly, widening to $285/mt for the difference between VLSFO and HSFO, surpassing its previous peak of $307/mt. This spread has widened from $201/mt on September 1st to its current level. In comparison, the spreads in Singapore and Zhoushan have narrowed, with Singapore's Hi5 spread dropping to $164/mt and Zhoushan's falling to $140/mt.

This widening spread in Fujairah increases the fuel cost savings for scrubber-fitted ships that burn HSFO instead of VLSFO. While fuel oil imports into Fujairah have dropped dramatically due to the Middle East conflict, reaching zero in April, they have slightly increased to 126,000 b/d so far in September, which is still less than half of January's level.

High-sulphur fuel oil makes up 80% of September's imports, with the remaining 20% being low-sulphur fuel oil. This is the first VLSFO reaching Fujairah since February, with no arrivals between March and August. Vortexa data shows that Fujairah's VLSFO price has increased by $163/mt this month, reaching $1,006/mt, while its HSFO price has risen by only $79/mt, to $721/mt.

The stock of fuel oil in Fujairah nearly doubled to 5.60 million bbls in the week to September 21st, from 2.84 million bbls a week earlier, according to Fujairah Oil Industry Zone data. However, the stock build has not led to a decrease in VLSFO prices. The VLSFO price hit a monthly high of $1,014/mt on September 20th, and the Hi5 spread has stayed above $280/mt since September 19th.

The supply of major bunker grades in Fujairah remains "super tight," according to a Middle East-based source. Availability is also limited at nearby Khor Fakkan due to US-Iran tensions disrupting shipping through the Strait of Hormuz. Similarly, Singapore's Hi5 spread narrowed as HSFO supply came under pressure, with recommended HSFO lead times stretching to 10-19 days, down from 10-12 days a week earlier.

Lead times for VLSFO in Singapore remain tight, with 13-17 days. Most suppliers in Singapore are holding low stocks, and cargo delays linked to the Middle East conflict are adding to the pressure. In contrast, Zhoushan's HSFO price is the highest among the three hubs, having climbed by $63/mt between September 22nd and 24th to $812/mt, which is $85/mt above Singapore's and $91/mt above Fujairah's.