Capitalizing on cheap Russia oil: Traders in Singapore reap big profits.

Demand for tankers is growing in Singapore, a sign that Russian fuel is being blended and re-exported around the world. The city’s tank stations are being seized as interest grows and cheap fuel from Russia is mixed with fuel from other sources, according to the manager of a tank operator and a consultant who advises traders on the issue. They said the process could help hide the origin of the cargo.

Singapore has not banned the import of Russian oil or petroleum products, although financial institutions based in the island nation are prohibited from financing or trading with Russian products and companies. Singapore government officials referred to earlier statements on the ban and price cap policies without further comment.

However, the use and trade of Russian fuel in the region is a sensitive issue, and some buyers do not want to see the cargo purchased.
Russian flows of oil and fuel to Asia and the Middle East increased after Moscow’s war in Ukraine prompted Western buyers to retaliate. Such shipments have increasingly found their way to mixing and redistribution centers such as Singapore and Fujairah in the United Arab Emirates, where they can be mixed, repackaged, and re-exported worldwide.

This increase in shipments from Russia to Asia and the growing role of hubs in redistributing them could increase further in the coming weeks as Europe prepares to impose new sanctions on Russian oil products on February 5. Oil market participants are closely monitoring where Russian fuels such as gas oil, oil, and heating oil find their homes, as many Asian countries do not take a strict stance on sanctions.

“We saw an increase in short-term and temporary inquiries until December,” oil storage company Advario Asia Pacific Pte. said via email. The company verifies the origin of products before accepting them to ensure compliance with Russian sanctions, the person added.
of Singapore’s Jurong Port Universal Terminal Pte. Ltd. declined to comment on specific product moves but said the company would comply with all applicable sanctions. Other warehousing companies include Horizon Singapore Terminals Pte., which did not respond to questions from Bloomberg, while a spokesperson for Royal Vopak NV declined to comment.

Advario, Jurong Port, Horizon, and Royal Vopak use commercial containers in Singapore. Singapore’s six-month fuel oil or crude oil lease costs have risen 17–20% over the past year, tanker managers said. Vortexa Ltd. 

Ship tracking data showed that Singapore’s oil receiving terminals took more than double the amount of Russian oil and fuel oil in December 2022 compared to a year earlier. The city-state received 2.6 million barrels of oil, which is almost40 times more than the previous year.

Russian crudes entering tanks in Singapore are likely to be re-exported to the Northeast Asian market, said Armaan Ashraf, global head of natural gas liquids at Singapore industry consultancy FGE. He added that it is likely that hubs such as Singapore and Fujairah will continue to play a role in rebranding these barrels for distribution in their respective regions.

russian oil


Oil Profits 

Traders and fuel suppliers are involved in oil storage and blending because the profit margins on such transactions are “very good,” said William Tan, director of Singapore-based marine fuel consultancy Miyabi Industries.


This is due to the availability of very cheap Russian fuel oil and other products such as light fuel oil, he said. It has a strong incentive to blend these deeply discounted varieties into blends that can be resold at much higher prices, prompting traders and fuel suppliers to seek onshore tanks or floating offshore storage for such blends.

Tan Energy estimates that dealers can enjoy a profit margin of almost 20 percent when they blend Russian components with other grades to make a fuel oil blended product. He added that this trend has been valid since October and exceeds the usual growth of 10–12%. However, there is room for margins to grow as sellers look to offload their cargo due to increased trade restrictions.

“Some of this mixed fuel may end up in bunker fuel in Singapore or be sold to nearby countries such as Indonesia and Vietnam,” Tan said.

Corpradar is a next-gen digital IR 4.0 corporate media house that combines the power of technology with human capital to bring decisive and insight-driven content on key business affairs. In an absolute sense, we create a space for leading business houses and visionary corporate leaders to chime in with their opinions and thoughts on relevant industry-specific matters that provide a detailed expert perspective for our followers.