SINGAPORE, June 15 (Reuters) - Asia fuel oil markets softened further on Monday after the U.S. and Iran reached an initial peace agreement, with cracks for high sulphur fuel oil (HSFO) sliding to levels seen in late-February.

Traders expect more ships to start exiting the Strait of Hormuz gradually in the coming weeks, even though cautious sentiment around uncertain logistics prevailed. They added that the impact on the HSFO market is more pronounced as the Middle East is a key exporter of the product.

The 380-cst HSFO/Brent crack FO380BRTCKMc1 closed lower at a discount of $5.30 a barrel, showed LSEG data. Timespreads for 380-cst HSFO also weakened sharply, trading into narrower backwardation for the prompt months, based on data from trade sources.

The market structure for very low-sulphur fuel oil (VLSFO) also weakened, though still retaining a floor compared to HSFO. VLSFO's crack LFO05SGBRTCMc1 dipped below a premium of $14 a barrel, LSEG data showed.

Market sources eyed a volatile and gradual re-opening of the Strait of Hormuz. Meanwhile, spot trading momentum was thin on Monday amid the cautious sentiment.

BUNKER SALES

Singapore's marine bunker sales recovered in May after a slump the previous month, logging a two-month high as vessel calls picked up, official data showed on Monday.

Bunker sales totalled 4.55 million metric tons in May, up 4.5% from April, though 6.8% lower than May last year, data from the Maritime and Port Authority of Singapore showed.

OTHER NEWS

- Oil prices slipped to a three-month low on Monday after U.S. President Donald Trump and Iran's deputy foreign minister said they had reached an initial deal to end the war and to resume traffic through the Strait of Hormuz. O/R

- Shippers said confidence in resuming transit through the Strait of Hormuz could take weeks to rebuild and navigation will only restart once safety is assured, after U.S. and Iran officials said they had agreed on a framework deal to reopen the waterway.

- The Russian government has authorised some oil refineries to produce gasoline and diesel fuel at lower environmental specifications for the domestic market, as the country grapples with fuel supply disruptions, the Kommersant newspaper reported.

- British oil major BP has started a process to sell stakes in two of its Gulf of Mexico projects, four people with knowledge of the matter said, in what would be one of new CEO Meg O'Neill's first moves.

WINDOW TRADES O/AS

- 180-cst HSFO: No trade.

- 380-cst HSFO: No trade.

- 0.5% VLSFO: No trade.

ASSESSMENTS

FUEL OIL
CASH ($/T)	ASIA CLOSE	CHANGE	PREV CLOSE	RIC
Cargo - 180cst	521.21	-32.29	553.50	FO180-SIN
Diff - 180cst	21.65	-2.20	23.85	FO180-SIN-DIF
Cargo - 380cst	517.85	-33.31	551.17	FO380-SIN
Diff - 380cst	24.45	-2.85	27.30	FO380-SIN-DIF
Cargo - 0.5% VLSFO	627.76	-39.14	666.90	MFO05-SIN
Diff - 0.5% VLSFO	26.60	-4.45	31.05	MFO05-SIN-DIF

For a list of derivatives prices, please refer to ENSWAP/INFO or the RICs below:
180cst M1	FO180SGSWMc1
180cst M1/M2	FO180SGSDMc1
380cst M1	FO380SGSWMc1
380cst M1/M2	FO380SGSDMc1
0.5% VLSFO M1	LFO05FSGMc1
0.5% VLSFO M1/M2	LFO05FSGSMc1
Cracks 180cst-Brent M1	FO180BRTCKMc1
Cracks 180cst-Dubai M1	FO180SGCKMc1
Cracks 380cst-Brent M1	FO380BRTCKMc1
Cracks 380cst-Dubai M1	FO380DUBCKMc1
Cracks 0.5% VLSFO-Brent M1	LFO05SGBRTCMc1
Cracks 0.5% VLSFO-Dubai M1	LFO05SGDUBCMc1
Visco 180cst/380cst M1	FOVISSGDFMc1
Hi-5 0.5% VLSFO/380cst M1	FO05-380SGMc1
GoFo 10PPM/0.5% VLSFO M1	GO10FO05FSGMc1
East-West M1	FOSGEWMc1
Barges M1	HFOFARAAMc1
Barges M1/M2	HFOFARAASMc1
Crack Barges-Brent M1	HFOFARAACMc1