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MABUX: Bunker market this morning, July 02.

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) continued upward trend on July 01:

380 HSFO - 420.33(+2.21)

180 HSFO - USD/MT - 457.93(+1.68)

MGO - USD/MT - 661.82(+1.72)

Meantime, world oil indexes changed irregular on Jul.01: Russia confirmed that OPEC and its allies would extend their production cut agreement for nine months, while a truce in the ongoing trade conflict between the U.S. and China helped ease concerns about a slowing global economy.

Brent for September settlement decreased by $1.49 to $65.06 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for August delivery rose by $0.62 to $59.09 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.97 to WTI. Gasoil for July lost $4.50.

Today morning oil indexes have turned into slight upward evolution.

Russia confirmed on Jul.01 that all members of the agreement between OPEC and non-member allies, known as OPEC+, had unanimously agreed to extend existing output cuts of 1.2 million barrels per day for a full nine months. Iran in turn said on Jul.01 it would support prolonging output cuts by six to nine months. OPEC and its allies led by Russia have been reducing oil output since 2017 to prevent prices from sliding amid soaring production from the United States, which has become the world’s top producer this year ahead of Russia and Saudi Arabia. The full ministerial meeting of OPEC+ remains scheduled to take place on Jul.02.

The U.S. and China agreed to restart trade talks after U.S. President Donald Trump pledged to hold off on the implementation of new tariffs and also ease restrictions on tech company Huawei in order to reduce tensions with Beijing. China meanwhile agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table. The pause in escalating trade tensions reduces concerns that the dispute between the two countries will negatively impact the global economy and the demand for oil and fuel.

The American Petroleum Institute (API) presented analysis saying that China's expected retaliation against US crude oil, refined products, and LNG would disadvantage US exports and could cascade into US domestic production. Besides, the U.S. market share in China for LNG and other petroleum products may be difficult to restore with China turning to alternative suppliers.

The four biggest oil buyers in Asia, all of which were regular Iranian customers until recently, imported in May the lowest volume of crude from Iran since at least 2014. China and India—Iran’s no.1 and no.2 oil buyers, respectively—significantly cut imports from Iran while South Korea and Japan, the other two major Asian oil importers, completely cut off oil trade with Iran in May. Combined, the four Asian countries imported just 386,021 bpd of oil from Iran in May, a 78.5-percent plunge compared to 1,798,090 bpd of imports in May last year. Yet, it appears that China is not cutting off its oil imports from Iran. Earlier last week, Iran delivered the first crude oil to a Chinese refinery complex since the United States removed the waivers - a first independent tanker-tracking confirmation that China is defying the U.S. sanctions on Iran’s oil exports.

The recent spike in tensions between the U.S. and Iran has pushed oil prices higher mostly because of the possibility that Iran may decide to go through with its threat to close off the Strait of Hormuz and cut off the supply of crude to global markets. However, some analysis said that the United States does not need to police the Strait of Hormuz anymore because it no longer depends on imports from the region: its Persian Gulf imports have slipped from about a sixth of consumption in 2012 to less than 10 percent last year: the average 2018 consumption was more than 20 million bpd; imports from the Persian Gulf hovered around 1.5 million bpd in the final quarter of the year.

The conflict in Libya has now widened to directly include Turkey, with General Khalifa Haftar launching an air strike on a Turkish drone and then seeking to calm the situation by reportedly releasing six Turkish sailors held captive. Libya has been a proxy war venue between many external forces since Haftar launched his offensive to seize Tripoli from the hands of the UN-backed Government of National Accord (GNA) earlier this year. Now the conflict has taken on significantly greater regional context with Turkey’s direct involvement. Turkey and Qatar are supporting the GNA, while the UAE and Egypt, most notably, have been supporting Haftar, including with military equipment in the case of the UAE.

We expect bunker prices may change irregular today in a range of plus-minus 4-8 USD.