OW Bunker Singapore Lost as Much as $13 Million on a Single Russian Oil Shipment

OW's Singaporean subsidiary bought 177,000 tons of oil just before oil prices crashed.

A single shipment of Russian oil caused between KR40 million and KR80 million ($6.5 million-$13.1 million) in losses for failed fuel supplier OW Bunker after executives at its Singapore subsidiary failed to hedge the 177,000 tonnes of oil they had bought, Danish press reports.

OW Bunker Singapore had purportedly been buying cheap oil in the Black Sea for some time and selling it at a profit in Russia and elsewhere, but the practice backfired after oil prices began to collapse in earnest during October.

The oil had reportedly been purchased in the Black Sea without the knowledge of OW Bunker management just before oil prices started to plunge, and in the 45 days it took to travel to Vladivostok in eastern Russia, the value of the cargo had decreased significantly.

The imminent loss, however, was never publicly disclosed, which was highly unusual and disappointing, according to Johnny Madsen, investment manager at Danish Wealth and Asset Management.

"It should have triggered an announcement," he said.

"They should have informed the stock exchange that there was a potential loss on the road."

The Singapore unit had also purportedly only been given the go ahead to sail with up to 100,000 tonnes of oil at a time, a far cry from the 177,000 tons that had been bought in the Black Sea.

Notes written by OW Bunker's lawyers, Hafnia Law reportedly reveal that the law firm had counseled the company on how to best minimise the loss in mid-October, recommending that the company attempt to cancel the contract.

OW Bunker filed for bankrupcty in Denmark in early November, with its U.S. and Singapore outfits following shortly after.