Over one million tons of Russia’s high-sulfur fuel oil (HSFO) is being stored in offshore tankers in Singapore and Malaysia, as Russia floods the Asian market with fuel oil ahead of the European Union’s sanctions on Russian crude oil and products.
According to KhabarOnline, citing Bloomberg and data from energy analytics firm Vortexa, approximately 1.1 million tons of Russian HSFO were stored in tankers near major Asian ports in the week ending October 24.
Based on this data, the volume of fuel oil stored in tankers has doubled compared to the same period last year. This is a sign that Russia, following the announcement of Western sanctions on its exports, has redirected much of its fuel oil to Asia.
Russia is the world’s largest exporter of residual fuel and has significantly increased its HSFO shipments to Asia. The increased HSFO exports to the East have impacted fuel oil prices in the region, even during the peak summer demand season when power plants in the Middle East and South Asia ramp up consumption to meet cooling demands.
Demand for Russian fuel oil in the Middle East has slowed after peaking in the summer, but according to Vortexa, Asia is importing an unprecedented volume of fuel oil in October. While Middle East imports of Russian fuel oil reached a record 210,000 barrels per day in July and August, demand dropped to 90,000 barrels per day in October.
However, Asia has seen a surge in Russian fuel oil imports, as the region has become a primary alternative destination for Russia’s fuel oil exports. According to Vortexa, preliminary figures for October show a record high of 560,000 barrels per day, an increase of nearly 50% compared to September.
Singapore, China, and India are the largest importers of fuel oil in Asia, but only 30% of Russia’s export volume included in Singapore’s import figures has been offloaded into onshore storage tanks. Vortexa stated that the remaining fuel oil has been delivered to floating storage tankers anchored nearby.