Asia fuel oil markets concluded the year with a bearish tone as spot differentials for Very Low Sulphur Fuel Oil (VLSFO) and High Sulphur Fuel Oil (HSFO) logged annual declines.
Supplies have gushed into the Asia region this year, on the back of Western sanctions that have driven consistent inflows of high-sulphur Russian cargoes for a third consecutive year since 2022.
Iraqi supplies have also been heavy in the year, while Pakistani exports also increased.
The low-sulphur market was also well-supplied by material from various origins, including Nigeria’s Dangote which has exported more residual fuels this year amid a shaky start-up of its gasoline-producing unit.
As for fuel oil demand, Singapore’s bunkering hub saw higher-than-average sales volumes in the year, data from the port authority showed. Annual sales for 2025 are set to breach 2024’s record high.
Meanwhile, Asia’s refinery feedstock demand for fuel oil, which mostly comes from China, has softened this year amid unattractive tax policies in the form of lower rebates during the start of the year.
PRICE BENCHMARKS
Singapore’s cash differential for VLSFO (MFO05-SIN-DIF) closed at a discount of about $1.50 a metric ton on the final trading day of 2025, versus premiums of more than $2 at the start of this year.
Meanwhile, the 380-cst HSFO differential (FO380-SIN-DIF) closed at a discount near $2 a ton, slumping compared to a premium of about $8 seen in early 2025.
The overall market is poised for a soft start into early 2026, weighed down by high inventories in the region, with prompt markets in a steady contango structure.
Front-month VLSFO cracks (LFO05SGBRTCMc1) ended the year at premiums near $4 a barrel, while 380-cst HSFO cracks (FO380BRTCKMc1) held at discounts wider than $7 a barrel, LSEG data showed.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters
