Flood of Russian Fuel Oil Into Singapore Boosts Bunker Margins

by Ship & Bunker News Team
Friday February 3, 2023

An influx of cheap Russian fuel oil into Singapore is helping lift margins on marine fuel sales.

Sanctions placed on Russian by a number of nations in response to its actions in Ukraine, such as the December price cap imposed by European Union member states, has put pressure on demand for Russian product, lowering its price.

While it remains a sensitive issue, many nations in Asia are taking a more neutral stance on the conflict and Singapore is among those who have no import restrictions on Russian oil.

This leaves the world's largest marine fuel hub able to take in the lower cost oil where it can then be blended and redistributed.

As blending Russian product with that from other sources can mask its origin, the resulting blend can be sold on at an elevated price.

William Tan, senior VP at Singapore-based marine fuel consultancy Miyabi Industries, estimates such blends can result in margins of around 20%, compared to a more typical 10-12% when using only non-Russian product.

"Some of this blended fuel may go into the bunker fuel in Singapore, or be traded off to nearby countries such as Indonesia and Vietnam," Tan was quoted as saying.

The dynamic has resulted in strong demand for storage in the city state, with local executives saying that over the last year the cost of a six-month lease for fuel oil and crude storage in Singapore has risen by as much as 20%.