Asia on Thursday received its first cargo of Mexican fuel oil in nine months, as buyers sought alternative supplies following disruptions to Middle East exports caused by the Iran conflict.
The cargo arrived in Singapore aboard the Suezmax tanker Orion, carrying about 160,000 metric tons of high-sulphur fuel oil loaded from Mexico’s Salina Cruz refinery, according to traders and Kpler shipping data.
The shipment comes as Asian fuel oil prices surged after supplies from key Middle Eastern exporters such as Iraq and Kuwait were constrained through the Strait of Hormuz.
Industry sources said tighter regional supplies and falling inventories in Singapore, Asia’s largest trading and bunkering hub, have increased demand for arbitrage cargoes from the West.
PMI, the trading arm of Mexico’s state-owned oil company Pemex, has also offered another 150,000-ton fuel oil cargo for June delivery to Asia through a tender expected to be awarded on Friday.
Analysts said strong Asian prices and oversupply in the Americas are encouraging Mexican exporters to redirect barrels toward Asian markets.
Emril Jamil, senior analyst at LSEG, said Mexican fuel oil cargoes are seeking better returns due to increased Venezuelan oil flows into the U.S. Gulf Coast market.
Data from Kpler showed that most Mexican fuel oil exports are usually shipped to the United States and Caribbean destinations rather than Asia.
The East-West arbitrage spread for front-month 380-cst high-sulphur fuel oil climbed to nearly $60 per ton this week, more than double levels seen before the conflict began.
Traders said the wider price spread between Asian and Western fuel oil markets has made long-haul shipments from the Americas and Europe to Asia commercially attractive once again.