Oil Tankers Avoiding Middle East Refuelling Hub After Attacks; Some May Turn to Singapore

July 08: Oil tanker owners are avoiding sending their ships to the Middle East’s main refuelling hub after a spate of attacks on vessels in the past two months ratcheted up tensions and highlighted the growing risks of operating in the region.

Strikes on tankers just outside the Persian Gulf in mid-June were the second in a month near the Strait of Hormuz, the chokepoint through which about a third of global seaborne oil moves. Now, demand for ship fuel at Fujairah, the United Arab Emirates coastal shipping hub close to the Strait, has waned as some tankers stay away, traders involved in the regional market said.

“Only expect issues to get worse before they get better,” said Matt Stanley, a senior broker at Star Fuels in Dubai. Fujairah is seeing “a significant drop in demand owing to war-risk premiums” that are levied by ship insurers, he said.

Ships won’t shun Fujairah entirely because there are few alternatives close by with the same range of services, the traders said. One possibility, though, is to go to Singapore for carriers that are making return trips from Asia. That can be advantageous for tanker owners anyway if they are considering sailing to West Africa to seek their next cargoes.

Vessels that go to Fujairah solely for fuel and servicing would be more likely go elsewhere, the traders said. However, a large proportion of tankers sailing through Hormuz to load crude or fuel in the Gulf will probably keep visiting the port as those ships will have paid higher insurance premiums already, they said.

Local officials say that there’s been no slump in refuelling from facilities at the port itself, but that only captures a fraction of the trade. Carriers are also supplied at anchorage areas – where four tankers were attacked in early May – and it’s there that brokers and traders are reporting the drop-off.

There is no public data for overall sales, but the brokers and traders say there’s been drop of about 15 per cent since the May attacks, although their estimates vary sharply. One broker said bunker demand had declined more than 30 per cent to as little at 500,000 tons a month.

Facts Global Energy estimates sales have slumped to about 650,000 tons a month, a drop of about 13 per cent compared with the period before the incidents. Volumes reached as much as 1 million tons in 2016, but had been slipping since then.

Source: Straits Times