The number of tankers used to store bunker oil along the Singapore Strait has increased since the Ukrainian war broke out, and will rise further as sanctions-hit Russian supplies head for Asia. It’s possible, industry sources and analysts said.
An increase in liquid storage supplies along strategic waterways indicates that more supplies are available to Asia, which will help ease tight markets. At the same time, however, it could limit the recovery of spot fuel oil prices this year, weighing on Asian refining profits for this grade.
Earlier this month, the European Union announced that it may ban the import and transit of some fuel oil from Russia from August 10.
The number of vessels used to store bunker oil in the Singapore Strait will total 18-20 by July, compared with 14-16 in the first quarter of this year, according to oil analysis firm Kpler. I was.
HSFO stocks, estimated at about 1 million tonnes, increased in July, nearly doubling compared to January, adding to total floating fuel oil stocks, according to Kpler data.
“The likely return of the increasingly shunned Russian fuel oil to eastern Suez could lead to more floaters arriving in the Strait,” said Jane Xie, senior oil analyst at Kpler.
South of Singapore, the 70-mile (113-kilometer) long strait lies between the Straits of Malacca and the South China Sea.
Inquiries about floating storage capacity along the strait increased after the war between Russia and Ukraine began in February, supporting shipping rates, market sources said.
There was demand to store Russian oil and other types of oil used in blends, they added.
While Asia has yet to receive a significant influx of Russian bunker oil, some buyers remain wary of buying oil directly from Russia, so some quantities will be shipped from ships before heading east. It has been moved to another place by moving to a ship.
Common locations for blending and re-exporting Russian oil include the Middle East trading hub of Fujairah and other ship-to-ship locations in the Mediterranean and the West, such as Amsterdam-Rotterdam-Antwerp (ARA). said the source.
Based on Refinitiv estimates, monthly Russian fuel oil supplies to Asia rose from 510,000 tons before the invasion to an average of 627,000 tons after the invasion.
Evolving Trade Flows
Refinitiv vessel tracking data shows that more Russian bunker oil has flowed into Fujairah since May, and some of these barrels are likely to be re-exported.
Yo Yang Chong, director of Refinitiv Oil Research in Asia, said: “HSFO continues to fall as the market is flooded with homeless Russian barrels stored in unlicensed commercial warehouses. probably,” he said, adding that Russian HSFO exports to Fujairah surged in July.
Fujairah has received more than 2 million tonnes of fuel oil from Russia so far this year and is expected to exceed 1.7 million tonnes in 2021, according to Refinitiv data.
Yeo said most of these casks have yet to find their way from Fujairah to Asia as they need to be further blended.
