Industry Insight: The Recent Relationship Between Brent and IFO380 Bunker Prices

2014-08-22

Due to the fact that Brent crude is priced in barrels, and bunker prices are quoted in USD per metric tonne (pmt), players often forget the deep discount marine fuel has on the product from which it came.

Using bunker price data from Ship & Bunker to calculate the average price of IFO380 in the key bunker ports of Singapore, Rotterdam,Houston, and Fujairah over the last 12 months, and then converting the price of Brent into USD pmt at a rate of 7.53 barrels pmt, we can see the price relationship much more clearly.

Over the last 12 months the average IFO380 bunker price for those ports has, on average, been 72.94% of the price of Brent for the corresponding period, with a spread between 69.85%(on September 6, 2013) and 76.25% (November 7, 2013).

By looking at the graph below, we can see that despite both Brent and bunker prices at their lowest for the period, since June IFO380's discount to crude has been steadily shrinking and is now nearing a 12-month low.

  

Source from : Ship & Bunker

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