- Rotterdam VLSFO up 28% since before Ukraine invasion
- Around 3.2 million b/d of Russian crude exported by sea
Tanker company Euronav has suspended operations with Russian customers and warned of the adverse effects of sanctions on its business and of higher fuel costs, says an article published in S&P Global.
Russia major exporter
Operations with Russian customers account for less than 5% of Euronav’s turnover but the consequences of the international reaction to Russia’s invasion of Ukraine could reach beyond that, given Russia’s role as a major crude exporter, the company said March 31 in its full-year results for 2021.
The price of marine fuels has jumped because of the conflict and is anticipated to remain elevated for the foreseeable future. Russia supplies global bunker markets with 20% of demand, including 0.5% sulfur fuel oil, 3.5% sulfur fuel oil and marine gasoil markets, Euronav said.
S&P Global Commodity Insights assessed delivered 0.5%S fuel oil at the European bunker hub of Rotterdam at $1,109/mt March 9, its highest ever. Since then, it has dropped to an assessment of $885/mt March 30 but is still considerably above $690/mt on Feb. 23, the day before the invasion.
The consequence for the tanker market
Forward prices display less bullishness, S&P Global assessed 0.5%S fuel oil FOB barge swaps at Rotterdam for Q3 at $699/mt March 30, falling to $666.75/mt for Q4.
Companies’ reluctance to do business with Russian companies has considerable consequences for the wider tanker market. Russia’s crude oil exports typically amount to about 4.6 million b/d with 2.5 million-2.8 million b/d heading to Europe, 1.5 million b/d to Asia and 210,000 b/d to the US, according to analysts at S&P Global Commodity Insights.
Of this, about 750,000 b/d goes via pipeline to Europe and 600,000 b/d via pipeline to China, leaving around 3.2 million b/d to travel by sea.
Not all of these barrels are under sanction but the market currently needs to replace around 2.6 million b/d of Russian exports, which have been displaced mostly by boycotts over Moscow’s war on Ukraine, Euronav CEO Hugo De Stoop said earlier in the week at the S&P Global Commodity Insights Oil & Energy Storage Conference.
The tanker market will therefore take some weeks at least to reorganize itself, De Stoop said.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: S&P Global
