Exports fell to 490,000 metric tons (104,000 barrels per day) in October, after hitting a record high of 720,000 tons in September, Kpler data showed, driven by lower volumes of very low sulphur fuel oil (VLSFO), used to power ships and generate electricity.
The drop in Kuwaiti exports has supported VLSFO prices in Asia, with benchmark Singapore cracks climbing to a four-month high of about $13 a barrel by end-October, based on LSEG data.
Kuwait became a key VLSFO supplier globally after it brought the new Al Zour refinery online. However, the refinery’s third and final crude distillation unit, which started up in July, has yet to ramp up to full capacity, trade sources said.
Meanwhile, the low-sulphur output has been diverted to fill up tanks at the Doha and Az-Zour power plants, which switched to burning low-sulphur fuel oil from high-sulphur fuel oil for power generation in October, consultancy FGE said.
“VLSFO exports from the Al Zour refinery should remain at similar low levels in November compared to October as stocks continue to be built up (domestically),” FGE said.
Asian refiners’ VLSFO margins are expected to remain supported in the coming weeks due to lower exports from Kuwait to Asia, it added.
The refiner has not issued any spot VLSFO tenders in recent weeks, the sources said, though it ramped up its HSFO export tenders.
Prices for prompt supplies have also trended higher than prices in future months. In late October, November VLSFO prices in Asia rose to $21 a ton more than for December, an eight-month high for that spread, LSEG data showed.