April Recap - European Fuel Oil

NWE fuel oil prices stabilised around post-shock March levels before surging into month-end, as the US Navy reaffirmed its blockade of Iranian ports. HSFO barges averaged $586.18/mt (-2.00% MoM, +46.0% YoY), while VLSFO barges averaged $643.94/mt (+0.90% MoM, +46.7% YoY), ultimately closing at a monthly high of $737/mt on 30 April.

​The price trajectory followed a clear V-shape. On 8 April, Trump’s ceasefire announcement triggered the steepest single-day decline in the series (HSFO -$63.50/mt, VLSFO -$82.00/mt), with week three marking the monthly low. This was followed by a sharp recovery, culminating in a strong week-five rally of +12.1% WoW for VLSFO and +8.6% for HSFO.

​Market structure shifted significantly over the period. The Hi5 spread widened dramatically, closing at $121/mt versus $18/mt at the start of the month. The HSFO crack weakened to -$28.25/bbl, while VLSFO saw pronounced bull steepening, with the M1–M12 spread expanding from $121 to $188.75/mt as Atlantic Basin export flows to the East tightened prompt supply.

​Trading activity reinforced this dynamic: VLSFO volumes rose 25% month-on-month, with Exxon emerging as the dominant seller and Totsa as the primary buyer.​

Market Activity

• HSFO: 377 bids, 130 offers, 53 trades; bid/offer 2.90; trade conversion 14% (53/377 bids lifted).
• VLSFO: 340 bids, 114 offers, 106 trades; bid/offer 2.98; trade conversion 31% - VLSFO clearing twice as efficiently as HSFO, consistent with the prompt scarcity that drove bull steepening.
• Producer EXTAP (ExxonMobil Asia Pacific) was dominant VLSFO seller (58% share of total trades) - single-counterparty concentration that quantifies the Atlantic-Basin export-east mechanism: the same producer redirecting Asian-arm cargoes into NWE while pulling barrels east via Singapore arb.
• Consumer-trader TOTSA dominated VLSFO buy-side (52% share); together TOTSA+EXTAP accounted for the majority of VLSFO trade flow, a two-name market in the highest-activity grade.
• ​HSFO selling concentrated in two intermediaries: Orim Energy (31 trades) and Vitol (18); together 92% of HSFO sell-side. Orim's dominance is positioning rather than flow (intermediary) consistent with the Hi5 widening they were short into.
• Producer-trader Shell Trading Rotterdam was the second top HSFO buyer (12 trades), behind United Bunkers (13); Shell on the buy side of HSFO at multi-year-high flat prices is the producer-buying-back signal flagged in the participant framework as "unusual" - consistent with locking in scrubber-economics demand.
• ​Two stress days illustrate the bid-stack/execution disconnect: 8 Apr ceasefire collapse saw 34 bids placed but only 6 trades cleared across both grades; 30 Apr saw 26 bids and only 3 trades — buyers leaning in through the news flow but sellers stepping back, consistent with the W5 price rally on thin executed volume.

Price Action

• HSFO avg $586.18/mt (-2.00% MoM, +46.0% YoY); open $605/mt, close $616/mt; high $654 (Apr 2), low $517.75 (Apr 17).
• VLSFO avg $643.94/mt (+0.90% MoM, +46.7% YoY); open $623/mt, close $737/mt; high $737 (Apr 30), low $576 (Apr 17).
• 8 Apr single-day collapse: HSFO -$63.50/mt (-9.8%), VLSFO -$82.00/mt (-12.1%) on Trump ceasefire announcement.
• W5 (27-30 Apr): VLSFO +12.1% WoW, HSFO +8.6% WoW as US Navy reaffirmed Iranian-port blockade (12 Apr) and Iran's 17 Apr reopening claim was rejected.
• ​On 30 Apr, the index settled at the monthly high for VLSFO; close vs open +$114/mt for VLSFO, +$11 for HSFO – sharp grade divergence at month-end​.

Cross-Market Dynamics

• ​HSFO crack vs Dated Brent avg -$28.25/bbl vs March -$9.49 (-$18.75/bbl deterioration); VLSFO crack avg -$5.28 vs -$3.09 (-$2.20).
• Hi5 (NWE prompt) closed $121/mt on the 30 Apr vs $18/mt month-open and $40 March avg; new monthly high.
• Mechanism: crude rallied on Hormuz risk; HSFO failed to follow as ME run cuts reduced sour supply less than crude pricing implied; VLSFO held margin via Atlantic Basin export pull east.
• HSFO crack at -$28/bbl is cash-negative for residual-yield refiners; further widening requires run cuts.

Cross-Regional Dynamics

• ​VLSFO EFS (Sing minus NWE) avg $88.71/mt vs March $196.18 (-$107.47); intra-month $199 (Apr 1) → $30 (Apr 29).
• ​HSFO 380 EFS avg $65.63/mt vs $94.32 (-$28.69); HSFO arb compressed but stayed positive (smaller pull east, scrubber demand floor in Asia).
• ​If Hormuz reopens sustainably, EFS normalises to single digits and NWE flat price faces unwind risk​.

Curve Structure

• ​VLSFO bull steepening intensified materially on 30 Apr: M1-M12 jumped +$34/mt vs Apr 29 close, doubling the month-open backwardation; M1 spot rose +$114/mt vs M12 swap +$55/mt across the month.
• ​HSFO pattern shifted on the final day of April: front M1-M2 still narrowing (compression at prompt) but M1-M6 and M1-M12 widened materially (+$23 M1-M12 vs only +$6.25 yesterday) - back-end repricing emerging, signalling structural HSFO supply concern catching up with VLSFO.
• If Hormuz reopens, VLSFO M1-M2 should compress sharply (test: spread back below $15/mt within two weeks); if blockade extends, VLSFO M1-M12 testing $200/mt is in play.

VLSFO

HSFO

Price Volatility

• VLSFO CV exceeded HSFO for first time in series (active vs drifting).
• Hedging models calibrated to 2-4% range underestimating realised vol 50-100%; assume 6-7% CV baseline until Hormuz clarifies.

Something to Watch

• VLSFO M1-M2 spread (Hormuz canary):
  
  • ​Observation: $41.00/mt at month-end, up from $21.00 at open.
  • Why it matters: above $50/mt signals intensifying east pull and NWE prompt scarcity; below $15/mt signals physical normalisation.
  • ​Monitor: weekly M1-M2 close; NWE-to-Singapore VLSFO loadings; ARA stocks
• HSFO crack vs Dated Brent (refinery-margin trigger):
  
  • Observation: -$28.25/bbl, worst in visible series.
  • ​Why it matters: cash-negative for residual-yield refiners; sustained sub-$25/bbl forces European run cuts, tightening HSFO from supply side.
  • Monitor: weekly HSFO crack; European refinery run rates; utilisation guidance from BP, Shell, ExxonMobil Rotterdam.
• Hormuz/blockade headline (binary catalyst):
  
  • Observation: Strait effectively closed despite 17 Apr Iran reopening claim; US blockade ongoing.
  • ​Why it matters: sustained reopening triggers VLSFO M1-M12 collapse (est -$80 to -$100/mt in two weeks) and EFS normalisation; escalation re-prices flat price 15-20% higher.
  • Monitor: daily Hormuz transit count; US/Iran statements; war-risk insurance premiums for Gulf transits.

Note: All figures, prices and market activity referenced in this report are based on the period 1–30 April 2026.