Singapore Poised for Oil Import Surge Amid Iran War Supply Disruptions
Singapore is poised to import an unprecedented volume of refined products in March, highlighting the country’s importance as a key oil trading hub at a time of widespread supply disruptions, according to shipping data and market sources.
The city-state could import up to 5 million metric tons of gasoline products, naphtha, gasoil and jet fuel in March, around 27% higher than the volume recorded in February, according to shipping data provider Vortexa. No other month in the past 10 years recorded an import volume of more than 4.5 million mt, the Vortexa data shows.
March volumes are not final as the data includes cargoes expected to land in Singapore by the end of this month.
Gasoline products and diesel made up the bulk of March’s imports, accounting for around 44% and 31%, respectively, followed by naphtha at around 18% and jet fuel at around 7%.
The incoming volumes far exceed Singapore’s own internal demand. While the Iran war that started at end-February has sparked refinery run cuts, force majeure declarations and fuel security measures in countries across the Asia Pacific, suppliers and traders are responding by diversifying their sources and bringing in cargoes into Singapore’s vast storage in anticipation of a spike in demand from affected buyers in the region, market sources said.
Countries in Southeast Asia and Oceania have named Singapore, among others, as an import source to maintain domestic fuel supplies since the start of the Iran war.
In particular, prices of key transport fuels — gasoil and gasoline — in Asia have shot up since the start of the Iran war. The price of FOB Singapore 10ppm sulfur gasoil was at $216.55/bbl on March 26, a 133% increase from the end of February, OPIS data shows. The price of FOB Singapore 92 RON gasoline, meanwhile, rose by around 63% to $130.05/bbl over the same period.
Despite talk of run cuts at refineries in Singapore, the country’s onshore stocks of light distillates reached a two-week high of 18.4 million bbl this week, while stocks of middle distillates reached a six-week high of 9.9 million bbl, according to government agency Enterprise Singapore, thanks in part to the strong imports.
But with oil exports from the Middle East largely reduced by the effective closure of the Straits of Hormuz, traders are having to reconfigure some of their cargo sources to keep up the import volumes, market sources noted.
In the 12 months to March, South Korea and Malaysia — where there is significant oil storage — accounted for 45% of Singapore’s gasoil imports. In March, however, India is expected to be the top supplier by far, accounting for around 37% of Singapore’s gasoil imports.
Refining run cuts have been rampant across most of Asia due to uncertainty over inflows of crude feedstock, but India’s Ministry of Petroleum & Natural Gas has maintained that refineries in the country are running at high utilization rates due to its ability to diversify and secure crude cargoes.
Traders have also been seeking out offers from Indian refining juggernaut Reliance Industries, which runs a 711,000 b/d export-oriented facility in the Jamnagar Special Economic Zone, market sources said.
The import surge into Singapore is likely to carry its momentum into April. Shipping data shows 5.75 million mt of light and middle distillates are due to load in March in the republic, almost 1 million mt higher than the volume expected to arrive the same month.
Loading volumes do not necessarily map to arrival volumes for the same month due to the voyage time involved.
Looking at regional demand and economics, the composition of the incoming imports is likely to shift towards gasoil over gasoline, market sources said.
There is, however, a limit to how far Singapore can be the trading hub for swing cargoes to meet regional demand. If exports via the Strait of Hormuz remain constricted, all countries would eventually have to tighten exports to protect domestic supply, the sources added.
—Reporting by Hanwei Wu; Editing by Mei-Hwen Wong, mwong@opisnet.com