More than 1 million tons of Russian high-sulfur fuel oil (HSFO) is being stored on tankers offshore Singapore and Malaysia as Russia is flooding the Asian market with fuel oil ahead of the EU embargo on Russian crude and products.
In the week to October 24, around 1.1 million tons of Russian HSFO were stored in tankers near major ports in Asia, according to data from energy analytics firm Vortexa cited by Bloomberg. The volumes of fuel oil sitting on tankers have doubled compared to the same period last year, according to the data - a sign that Russia is rerouting a lot of its fuel oil toward Asia after the Western governments announced sanctions on its exports.
Russia is the world's top exporter of residual fuels and is significantly increasing its shipments of HSFO to Asia, Roslan Khasawneh, senior fuel oil analyst at Vortexa, wrote in an analysis on Thursday.
The higher Russian exports of HSFO to the east have been weighing on the fuel oil prices in the region even throughout the peak summer demand season, when power plants in the Middle East and South Asia ramp up consumption to meet cooling demand, Khasawneh said.
Demand for Russian fuel oil in the Middle East has lost momentum after the peak summer demand, but Asia is set to import record volumes of fuel oil in October, according to Vortexa.
While the Middle East's imports of fuel oil from Russia were at a record 210,000 bpd in both July and August, demand has slowed to 90,000 bpd in October.
Asia, however, sees rising imports of Russian fuel oil as the region is now a major alternative outlet for Russia's fuel oil exports, Vortexa's Khasawneh noted. Imports from Russia into the region continue to set records. Preliminary figures for October show a fresh high of 560,000 bpd, which is up almost 50% compared to September, according to Vortexa.
Singapore, China, and India are the top importers in Asia, but only 30% of the Russian volumes included in the Singapore import figures were offloaded into landed storage tanks. The rest of the fuel oil has been delivered onto floating storage tankers anchored nearby, Vortexa said.
By Tsvetana Paraskova for Oilprice.com
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