- A sudden fall in global fuel consumption has crimped the demand.
- Ships are very much used to store oil.
- Presently, Singapore has become even more congested as oil-laden tankers wait in its narrow waterway.
- Nearly, 60 clean fuel tankers are currently anchored along the busy strait.
- Across the world, freight rates for both clean as well as dirty tankers have surged dramatically.
Elizabeth Low writes for Bloomberg about the dwindling storage of oil alongside the shores of Singapore. A lot of ships are used to hoard fuel at sea as onshore tanks fill up. While, others wait for a redirection to any interested buyer across Asia and the world.
Ships from China and South Korea
In China and South Korea refinery hubs, due to poor domestic demand and swelling stockpiles, ships filled with oil products such as gasoline and jet fuel move towards Singapore Straight. Offloading delays has made the vessels to wait for at least two weeks. Earlier, it used to only 4-5 days.
Dwindling storage options
- Storage options are dwindling globally as onshore tanks rapidly fill to capacity.
- This has prompted traders, refiners and infrastructure companies to seek alternatives such as pipelines and ships.
- Those who managed to snag some highly-coveted tanks in Singapore were being charged much higher rates.
“Major fuel-exporting countries are facing difficulties finding homes for their surplus barrels,” said Sri Paravaikkarasu, Asia oil head at industry consultant FGE. In Singapore, crude processing rates at refineries have probably dropped to around 60% of capacity, and may drop further to as low as 50% during the second quarter, she said.
Utilizing tankers has become the next best option, with analytics firm Vortexa estimating floating crude oil storage in Asia at a four-year high. Taking into account the waters off Singapore as well as Malaysia, data intelligence firm Kpler saw a 45% month-on-month increase in the volume of clean fuels — comprising naphtha, gasoline, jet fuel and diesel — stored on ships to 6.64 million barrels as of April 23.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!