The ongoing Iran war has found its new victim, as oil product stocks in Asia’s key trading hub Singapore fall to their lowest levels in nearly 13 years, led by a sharp drawdown in residual fuel inventories, stated the Enterprise Singapore data.
Following the global pattern, combined onshore oil product stocks totalled 34.41 million barrels in the week to June 10, the lowest since July 2013.
Inventories of residual fuel, the most stored oil product in the city-state’s storage tanks that typically goes into ships as marine fuel or to refineries as feedstock, totalled 14.84 million barrels during the same period, hitting their lowest in close to eight years.
Oil inventories in global storage hubs have been shrinking as most Middle Eastern shipments remain curtailed due to the Iran war and, most importantly, the blockade in the Strait of Hormuz, the maritime chokepoint that facilitates the daily transit of roughly USD 600 billion worth of energy trade.
Coming back to Singapore, the latter’s net imports of heavy distillates fell by 36.3% week-on-week, while there was no increase in import volumes from the Middle East.
“Recent flows have been stabilised by heavy US exports and vessel repositioning, but these are temporary supports. Inventories are being drawn down, key hubs are nearing operational minimums, and geopolitical risks around the Strait of Hormuz remain unresolved,” Sparta Commodities analysts told Reuters.
Fuel oil trading sources, quoted by the media outlet, expect residual fuel inventories to rebound amid more incoming supply replenishments from the West. Meanwhile, middle distillate stocks have declined further, hovering at about three-month lows, though net exports of both diesel and jet fuel grew week-on-week.
Singapore’s diesel/gasoil and jet fuel/kerosene stocks stood at around 6.9 million barrels, down from 7.3 million barrels a week earlier. Net exports of diesel/gasoil grew nearly five times from a week earlier, with total imports falling 42% week-on-week. Cargoes from India, South Korea and Indonesia were the key contributors to imports.
More Indian-origin barrels are likely slated to hit Singapore shores in June, with a narrowing east-west price spread making it more profitable for sellers to send their cargoes to Asia instead of markets west of Suez.
Singapore’s exports gained 56% week-on-week, with volumes to regional destinations such as the Philippines, Vietnam, Australia and Malaysia remaining robust. As for jet fuel, net exports rose nearly 8%. Light distillate stocks, which include naphtha and gasoline, rebounded to a two-week high of 12.66 million barrels.