(Bloomberg) — Some shipowners are avoiding Fujairah — a major oil port just outside the Strait of Hormuz — prompting cancellations that should allow producers to resell the cargoes at a higher price.
A widening conflict in the Gulf has upended the energy trade in the region, hitting oil and gas infrastructure and all but cutting off traffic through Hormuz, the narrow waterway connecting producers in the region with the rest of the world. Fujairah, one of the few terminals in the region that is still exporting, has also reported missile threats.
Nippon Yusen KK has stopped calling at the United Arab Emirates port, a spokesperson at the Japanese company said. At least one major European shipper is also shunning the terminal, according to traders with knowledge of the decision, who asked not to be named discussing sensitive information.
Shipping companies are wary of drone or missile strikes and also cite hesitant insurers, the traders said. This week, local authorities said they contained a fire at the Fujairah Oil Industry Zone caused by falling shrapnel following air defense interceptions, according to state-run news agency WAM. Several buyers have had to cancel their some term shipments of Murban oil, returning the crude to Abu Dhabi National Oil Co., they said.
ADNOC has since marketed some prompt cargoes, they said. The canceled cargoes would have been sold to the original buyers at the $63.99-a-barrel official selling price for Murban for March, and may now be able to command spot market prices — well over $80 on Wednesday, even after recent volatility.
ADNOC didn’t respond to requests for comment on the matter.
Other ports still exporting Middle Eastern oil include Yanbu on Saudi Arabia’s western coast, and Mina al Fahal in Oman.
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