Asian HSFO spreads climb to unprecedented levels

Cracks spreads for high-sulphur fuel oil in Asia rose to record highs as Middle Eastern exports tightened amid the geopolitical crisis, data from LSEG showed on Wednesday.

The 380-cst HSFO/Dubai crack for April rose above $7 a barrel on Wednesday, up from $3.28 a barrel at the Asia close on Tuesday.

The more active contract for 380-cst HSFO/Brent crack for April was trading at premiums of around $4 a barrel, touching a record high of around $4.40 earlier in the session.

The crack spread measures the profitability of producing fuel oil from crude during the refining process.

The residual fuel markets have firmed sharply this week as the Middle East is a major exporter of fuel oil to Asia, with volumes mostly ending up in major bunker hub Singapore or in refineries as feedstock.

The US–Iran conflict has disrupted loadings through the Strait of Hormuz, the waterway which connects gulf refineries to the wider oceans, spurring fears of prolonged supply shortage in Asia, traders said.

(Reporting by Jeslyn Lerh; Editing by Jamie Freed and Christian Schmollinger)