Summary
HSFO led the headlines in the fuel oil market this month. Attacks on vessels serving Saudi ports disrupted Middle East HSFO supply just as Egypt and Bangladesh increased HSFO for use in power generation, in a bid to displace more expensive LNG. The 380cst crack against Dubai flipped from deeply negative in September to firmly positive while the flat price gained roughly a fifth month-on-month, and physical cargoes closed the month at their strongest premium to paper. VLSFO rose with the complex but lagged the rise in HSFO, its physical differential capped by increased supply from Brazil and Russia, so the Hi-5 spread collapsed to near-record compression mid-month before a partial rebound. The same Middle East and Russian tightness, with arbitrage flows capped by elevated freight, pushed the East/West spreads wider, keeping Singapore stronger relative to Europe. Both swap curves steepened hard, with the HSFO front leading. Heading into November, the market was pricing in an acute shortage of prompt HSFO supply, while the back end of the forward curve assumes normalised supply from April onwards.
Market activity
- HSFO window saw 323 bids against 58 offers (5.6:1) and four trades; CHIMBUSCO was the seller on every trade and the top offerer (23 of 58 offers), with trading-arm and intermediary bidding crowded across Vitol (66), Union (66), Trafigura (62) and Shell (61)
- VLSFO window was balanced at 99 bids vs 86 offers (1.2:1) with five trades; buying interests came through BP (three purchases), while Shell led selling (three trades)
Price action
380cst HSFO FOB Cargoes (USD/MT)
| Week | Avg Price | WoW Change | Key Event |
|---|---|---|---|
| W1 (1–2 Oct) | 702.45 | Monthly low $697.35 printed 2-Oct | |
| W2 (5–9 Oct) | 729.24 | +3.8% | Crack vs Dubai turned decisively positive |
| W3 (12–16 Oct) | 792.98 | +8.7% | Breakout week; +$31.40 single-day jump 12-Oct |
| W4 (19–23 Oct) | 793.52 | +0.1% | Plateau at the new range, no retracement |
| W5 (26–30 Oct) | 820.55 | +3.4% | Monthly high $845.58 at the close 30-Oct |
Source: GX Go
0.5% VLSFO FOB Cargoes (USD/MT)
| Week | Avg Price | WoW Change | Key Event |
|---|---|---|---|
| W1 (1–2 Oct) | 816.70 | Monthly low $809.23 printed 2-Oct | |
| W2 (5–9 Oct) | 824.10 | +0.9% | MOS differential bottomed at $18.52/MT 9-Oct |
| W3 (12–16 Oct) | 842.80 | +2.3% | Hi-5 compressed to $36.76/MT 15-Oct |
| W4 (19–23 Oct) | 866.12 | +2.8% | Steady movement higher |
| W5 (26–30 Oct) | 911.25 | +5.2% | Strongest week; high of $934.68 at the close 30-Oct |
Source: GX Go
- HSFO averaged $776.65/MT vs September’s $651.38/MT (+19.2% MoM, +104.5% YoY); VLSFO averaged $857.03/MT (+6.8% MoM, +92.5% YoY); both grades closed at their monthly highs
Cross-market dynamics
- HSFO crack vs Dubai swung from a September average of -$11.04/bbl to +$11.58/bbl in October, peaking at +$21.04/bbl (16-Oct), signalling genuine scarcity of barrels
- VLSFO crack vs Dubai widened from $12.75/bbl to $24.23/bbl, closing at $28.49/bbl; both grades outran crude
- Hi-5 spread averaged $80.38/MT vs September’s $151.03/MT, troughing at $36.76/MT (15-Oct) before rebounding to $89.10/MT; the compression was HSFO relative strength rather than VLSFO weakness, with the VLSFO physical differential capped by increased Brazilian and Russian supply
Cross-regional dynamics
- HSFO East/West (Singapore cargoes minus NWE barges) averaged $163.55/MT vs September’s $97.61/MT, closing at $190.08/MT near the monthly wide of $194.43/MT (16-Oct)
- VLSFO East/West widened from $163.94/MT to $178.52/MT on average, closing at $201.18/MT
- Middle East and Russian supply tightness kept the East/West spreads elevated while elevated freight rates capped arbitrage flows; a spread this wide that fails to pull barrels east is a freight story, not a closed-arbitrage story, and leaves Singapore structurally stronger until tonnage economics improve
Curve structure
0.5% VLSFO swaps (USD/MT)
| Spread | Month-Start | Month-End | Change |
|---|---|---|---|
| M1-M2 | +38.75 | +45.00 | +6.25 |
| M1-M6 | +114.15 | +185.59 | +71.44 |
| M1-M12 | +166.40 | +282.09 | +115.69 |
Source: GX Go
380cst HSFO swaps (USD/MT)
| Spread | Month-Start | Month-End | Change |
|---|---|---|---|
| M1-M2 | +37.25 | +62.95 | +25.70 |
| M1-M6 | +95.25 | +188.87 | +93.62 |
| M1-M12 | +144.50 | +267.62 | +123.12 |
Source: GX Go
- Both curves steepened: HSFO M1 gained $181/MT vs M12 +$57.88MT, VLSFO M1 +$150.75/MT vs M12 +$35.06/MT; the front priced acute scarcity while the back priced eventual normalisation of Saudi loadings
Price volatility
| CV (%) | May-26 | Jun-26 | Jul-26 | Aug-26 | Sep-26 | Oct-26 |
|---|---|---|---|---|---|---|
| 380cst HSFO | 5.07 | 16.60 | 12.33 | 5.49 | 6.71 | 5.52 |
| 0.5% VLSFO | 4.18 | 10.81 | 10.73 | 2.70 | 3.25 | 4.21 |
Source: GX Go
- HSFO CV of 5.52% sat below September’s 6.71% even as the average rose 19%; the move was a sustained one-way trend rather than a two-way volatility regime, which is cheaper to hedge but harder to fade
- VLSFO CV rose to 4.21% from 3.25%, the late-month acceleration adding dispersion
Something to watch
- The Hi-5 closed at $89.10/MT after troughing at $36.76/MT, and the nearest supply relief is Saudi Arabia’s high sulphur export tenders, running since September at around 600kt and 700 to 800kt in October. Continued tenders at that scale would relieve the HSFO tightness, while a halt would extend the prompt squeeze. Monitor Saudi tender release, the weekly Hi-5 close, and Fujairah Oil Industry Zone (FOIZ) and Enterprise Singapore inventories.
- Egypt’s 700kt HSFO import tender was heard to filled by Russian barrels, diverting flows from Singapore. Sustained Egyptian power-generation against a backdrop of elevated LNG prices would pull further Russian volumes west and keep the 380cst vs MOS differential. Monitor Egyptian tender awards, LNG prices, and Russian fuel oil export destinations.
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