Singapore HSFO-Dubai crude crack exceeds $10 per barrel

The price spread between Singapore high-sulphur fuel oil (HSFO) and Dubai crude oil surged above $10 per barrel in mid-October. This marks a significant reversal from February, when HSFO traded at a discount of approximately $5 per barrel relative to crude, representing a price swing of more than $15 per barrel.

The price spike is driven by a combination of reduced supplies from the Middle East and Russia, alongside resilient demand for marine bunker fuels. Middle Eastern HSFO and very-low-sulphur fuel oil (VLSFO) supplies to Singapore have seen notable declines, while Russian HSFO shipments dropped from roughly 180,000 barrels per day in April to 25,000 barrels per day in September.

Rising freight costs are further complicating the market. The cost of transporting HSFO from Europe to Asia has reached approximately $36 per barrel, more than five times the level seen last year. These high shipping expenses make it difficult for replacement cargoes to offset the supply shortages in the Singapore market. While seasonal increases from Gulf producers and Chinese export quotas may provide some relief for VLSFO toward the end of the year, the overall market remains vulnerable due to expensive shipping and disrupted global flows.