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.

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In the first half of the year, the country’s crude oil exports increased 33 percent to an average of 51,840 barrels per day from 44,928 barrels per day in the previous year, according to Argentina Oil and Gas Institute’s data. It is also reported Chile’s pipeline can be revamped for exporting up to 100,000 barrels per day with an initial investment ranging between $ 5 million to $10 million.

Argentine President Alberto Fernandez, said in a statement that it is important to increase energy production “to adequately supply domestic needs, replace imports, and generate higher exportable balances that produce a growing favorable energy trade balance.” 

According to economists, the Argentine economy is forecasted to shrink by more than 12 percent this year and hit slow recovery next year. This fluctuation in economic growth can be attributed to the country’s previously implemented lockdown for a period of four months, media reports said.

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Its renewable energy strategy is in line with the Vision 2030 framework. The strategy will have an energy mix which is crucial for the Kingdom’s long-term economic prosperity. 

According to Prince Abdulaziz bin Salman Al Saud, Saudi Arabia’s Minister of Energy, “The best energy power mix for Saudi Arabia is gas and renewables. By 2030 we will be developing our gas resources. We will be quite big in terms of renewable use. The more we use renewables and gas for our consumption, the more we will be freeing liquids which are exportable to the world market.” 

Last December, the Kingdom was expecting to generate investments worth $3.7 billion in the second and third rounds of the National Renewable Energy Programme, the media reports said. 

The renewable energy investments are expected to create 6,800 construction job opportunities and 730 jobs in the operation and maintenance phase. The National Renewable Energy Programme is designed to monitor the domestic power mix. 

Round two of the National Renewable Energy Programme currently has six photovoltaic solar independent power projects, with a combined capacity of 1,270MW. Likewise, one wind project and five solar projects with a combined total capacity of 1,580MW are under round three. 

Prince Abdulaziz emphasised that it is important for the Kingdom to become a significant consumer of renewable energy. To that end, a price reform programme is necessary, he said. 

The Kingdom’s renewable energy targets involve improvement aimed at buildings, vehicles, utilities and manufacturers. 

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The initiative was launched to form a coalition after attacks on oil tankers in the region. Currently, the US, the UK, Bahrain and Australia are the only member countries of the task force. 

The International Maritime Security Construct is the US-led coalition. The Kingdom of Saudi Arabia will join the task force aimed at securing oil shipping in the Strait of Hormuz and the Bab el-Mandeb.  Nearly 40 percent of the world’s oil shipping travel through the Strait of Hormuz,. The Bab el-Mandeb is another strait that links the Red Sea and the Gulf of Aden off. 

An official told a state-run media, “The kingdom’s accession to this international alliance comes in support of regional and international efforts to deter and counter threats to maritime navigation and global trade in order to ensure global energy security and the continued flow of energy supplies to the global economy and contribute to maintaining international peace and security.” 

The US is ramping up efforts to secure the Strait of Hormuz. It has sent Arleigh Burke to strategically block positions in the Strait of Hormuz. In addition, they will monitor the ship traffic and keep an eye out for any unusual movement, such as drones and other aircraft. 

The International Maritime Security Construct task force is headquartered in Bahrain. World’s biggest oil exporter Saudi Aramco’s two facilities in the Kingdom were attacked. As a result, half of its crude output was affected. 

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The company’s decision to set-up an oil unit comes as it seeks to supply fuel to ships passing a prominent maritime route, the media reports said. Sinopec is China’s latest investment in Sri Lanka and is considered important to its Belt and Road Initiative’s infrastructure plan.

Sinopec has strategically identified Hambantota on the Indian Ocean along a major maritime route between the Suez Canal and the Malacca Strait. The route is used by two-thirds of global oil shipments and hence there is ‘huge’ potential to supply fuel to ships. 

China considers relations with Sri Lanka important and has shown support to Colombo’s efforts to safeguard national unity and strengthen economic development. In 2017, China had offered to work with Sri Lanka to advance the construction of Colombo Port City, Hambantota Port and logistics parks. 

This year, India’s Accord Group and Oman’s Ministry of Oil and Gas signed a $3.85 billion deal to construct an oil refinery in Sri Lanka. The deal is seen as the biggest foreign direct investment pact in the country. 

The refinery will be built on 585 acres near the Hambantota Port with a capacity to produce 200,000 barrels per day. The refinery is expected to produce 9 million metric tonnes of refined oil each year for export from the port. 

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The Kingdom’s East-West pipeline system transports crude oil from the eastern province to the Yanbu port. Likewise, the UAE’s Habshan-Fujairah oil pipeline goes around the Strait of Hormuz, connecting Abu Dhabi’s oil fields to the export terminal in Fujairah, Khaleej Times reported.

The UAE pipeline’s transport capacity is 1.8 million barrels per day, meaning that it covers 75 percent of its oil exports. That said, the Kingdom’s transport capacity is 5 million barrels per day, which is about two-thirds of its crude exports.

The Strait of Hormuz is a narrow sea passageway for oil shipments from the Middle East. Because it is the main artery for oil transport, countries have been relying on it for a long time. If Iran decides to close the Strait of Hormuz, then ‘no one will benefit from it’, Alireza Tenksiri, commander of the naval forces of Iran’s Islamic Revolutionary Guard Corps said.  

Countries including Kuwait, Bahrain, and Iraq do not have an alternative oil export route and will be at the receiving end of the conflict. But Oman’s major ports are located outside of the region. This way, the Strait of Hormuz closure will barely affect its oil shipments. 

Senior analyst at Moody’s Alexander Perjessy said, “The Strait’s closure would disrupt tanker traffic and weigh on the foreign exchange and fiscal revenue of those sovereigns most reliant on the Strait for transporting oil and gas exports. Kuwait, Qatar, Iraq, Bahrain and, to a lesser extent, Saudi Arabia and the UAE, are a credit negative.”

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