Singapore fuel oil imports to rise on Red Sea diversions

Singapore’s fuel oil imports have been rising steadily since last August, reaching a peak of 950kbd in December, before witnessing a slight slowdown last month that is likely to be temporary. Robust bunker sales in Singapore, combined with an open east-west arbitrage last quarter have been the driver behind the growth momentum in recent months. Imports of fuel oil cargoes from Northwest Europe in January reached 85kbd, the highest since July 2022, buoyed by a short-lived open arbitrage which has since closed. Increased supplies from Indonesia and Japan have lifted total supplies from Asia into Singapore to over 250kbd in the last two months, and are on-track to surpass this level for the third month. This has consequently lifted the share of LSFO imports into Singapore significantly to over 50% in December and January, up from under 30% last August.

 Singapore fuel oil imports by shipping region (kbd, LHS) and share of LSFO and HSFO (%, RHS)

Singapore’s bunker sales could see more upside in the months ahead, fuelling the country’s imports. More vessels choosing to transit via the Cape of Good Hope instead of the Suez Canal and travelling at higher speed to reduce delivery times have led to increased bunker demand globally, with an expected outsized benefit to Singapore.

 Tankers laden with Russian residual fuel oil transiting through Cape of Good Hope

While many tankers have avoided the Bab El-Mandeb, a healthy number of vessels carrying Russian residual fuel oil are still opting to travel through the Bab El-Mandeb. As of 14 February, four tankers laden with Russian residual fuel oil have transited through the Cape of Good Hope, and another three tankers are headed towards the waypoint. Other tankers with Russian residues on board are still transiting through Bab El-Mandeb but more vessels could be seen diverting towards the Cape of Good Hope if tensions continue to escalate.

 Russian residual fuel oil flows that have transited through Bab El-Mandeb and Cape of Good Hope (kbd)