Shipowners avoid bunkering in far east Russia

A number of shipowners are avoiding far east Russia for bunkering because of the country's increasing isolation over its invasion of Ukraine.

Very-low sulphur fuel oil (VLSFO) demand is shifting from Vladivostok, Nakhodka and Kozmino to ports in South Korea and Japan, according to market participants. South Korean and Chinese shipowners were tightening their enquiries citing the "unstable situation" in Russia.

Trading firms in Russia in return have largely withdrawn from the far east market for the next several weeks. Bunkers in far east Russia typically have very low viscosity, which is another reason for buyers to shift to South Korea where the quality is better, said a London-based broker.

Market participants in Singapore said they do not expect much operational impact from the crisis in the Ukraine. But they are worried about a shift in demand to South Korea, Japan and China where prices for VLSFO have been cheaper for a while now.

"Perhaps we'll see less fuel oil imports coming into Singapore from Russia, but it doesn't matter much because end-user demand is not there anyway", said a trader.

Delivered bunker prices are almost at par with ex-wharf prices, as a shift in demand is occurring from Singapore to northeast Asian ports where increasing volumes of VLSFO are produced and bunker prices are more competitive as a result.

Japanese bunker trading firm have also suspended deals with Russia because of concerns about future payments.

The discount of VLSFO bunkers in far east Russia to Singapore has averaged $56/t since Russia invaded Ukraine on 24 February compared with an average of $2/t in 2021, according to Argus data.

By Sammy Six