Fujairah fuel oil stocks hit 16-month high on steady Russian inflows
By Jeslyn Lerh
SINGAPORE, Oct 12 (Reuters) - Residual fuel oil stocks at the UAE's key trading hub Fujairah surged to a 16-month high this week, as Russian barrels continued to move towards the Middle East ahead of upcoming European Union sanctions.
The EU will ban Russian crude imports by Dec. 5 and Russian oil products by Feb. 5, which are moves that will drive further shifts in global trade flows.
Common locations for blending and re-exporting Russian oil include the trading hub of Fujairah and other ship-to-ship locations in the West.
Stocks of residual fuels at Fujairah rose 6% to 13.40 million barrels (2.11 million tonnes) in the week ended Oct. 10, data from the Fujairah Oil Industry Zone published by industry information service S&P Global Commodity Insights showed on Wednesday.
"Fujairah fuel oil stocks have generally trended higher since around the start of Q2 due to increased imports from Russia and, more recently, a slowdown in regional power generation demand," said Roslan Khasawneh, senior fuel oil analyst at oil analytics firm Vortexa.
Based on Vortexa data, imports from Russia and Iraq made up the bulk of fuel oil imports into Fujairah in the week to Oct. 9 at 210,000 tonnes and 140,000 tonnes, respectively, he said.
The latest fuel oil stocks at Fujairah were also boosted by higher net imports, which hit a near six-month high of 190,000 tonnes in the week to Oct. 9, Khasawneh added.
More Russian fuel oil has been flowing into Fujairah since May, with some of these barrels likely to be re-exported elsewhere as barrels find homes in unsanctioned commercial storage.
Meanwhile, slowing fuel oil exports out of Fujairah and lower bunker sales have also led to the recent build in inventories.
"This appears to be driven by a slowdown in shipments to Singapore and Malaysia, where inventories are also building," said Timothy France, MENA senior oil analyst at Refinitiv Oil Research.
The regional refinery maintenance schedule appears light, so fourth-quarter fuel oil production should remain robust amid strong refinery profit margins, said analyst France.
Ongoing operations at Fujairah refinery units have recently imported significant crude feedstock volumes for October, which means their fuel oil output is contributing to heavy distillate stocks at Fujairah, he added. (Reporting by Jeslyn Lerh; Editing by Devika Syamnath)
