Kuwait fuel oil exports rise for second month as Al Zour ramps up

SINGAPORE: Kuwait’s fuel oil exports rose for a second month in February, according to shiptracking data from Kpler and LSEG, as the Al Zour refinery powered towards full capacity.

Since bringing Al Zour online in late 2022, Kuwait has become a major exporter of refined products, especially very low sulphur fuel oil (VLSFO) used in shipping.

Consultancy FGE said Al Zour runs reached full capacity of 615,000 barrels per day for the first time in February, although further testing could see this ease again.

“We anticipate Al Zour’s average runs in 2024 will be around 415,000 bpd (67%), with a sweet spot ranging from 400,000 to 450,000 bpd,” said Palash Jain, FGE’s Middle East oil analyst.

Kuwait’s oil exports hit a record high of about 720,000 metric tons (158,000 barrels per day) in February, data from analytics firm Kpler showed.

Very low sulphur fuel oil (VLSFO) accounted for about 60% of the volume and high sulphur fuel oil (HSFO) for 40%, Reuters calculations based on Kpler’s data showed.

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Roslan Khasawneh, senior oil analyst at Kpler, said the OPEC producer’s VLSFO exports are likely to be steady to higher in March given firm regional prices and spare refining capacity.

“Peak power demand in the summer could pressure VLSFO exports from current levels but not dramatically given Al Zour’s ample production capacity,” he added.

LSEG data put total February exports at about 516,000 tons, the highest since March 2016.

Kuwait Petroleum Corp did not respond to a request for comment.

HSFO exports from Kuwait’s Mina Al Ahmadi (MAA) refinery also rose for a second month.

VLSFO exports are recovering from a slowdown in the fourth quarter when supplies were diverted for domestic power generation.

KPC increased the number of spot VLSFO tenders from Al Zour to three in February, trade sources said. A single tender in January was the first after a gap of more than three months.

The rise has pushed cash differentials for VLSFO in Asia down nearly 8% since the start of February.

Since Al-Zour started operations, more than 50% of Kuwait’s VLSFO exports have gone to Singapore, the world’s top bunkering port, while more than 40% remained in the Middle East, with Fujairah in the United Arab Emirates a main destination, based on trade sources and Kpler.