Russian oil floods UAE port of Fujairah

by Jeslyn Lerh

DUBAI, March 14 (Reuters) – Oil storage demand and transit at the United Arab Emirates port of Fujairah are expected to grow further this year as Russian trade flows continue to pour into the hub, while the latest prices for Russian oil products The cap has moderated the impact on trade, industry executives said Tuesday.

Barrels of Russian oil have been flowing into popular ship-to-ship transshipment hubs in the Middle East and Asia since last year as Western sanctions reshuffled trade flows.

“We’re seeing a lot of Russian barrels pouring into Fujairah…especially Urals (crude oil) and naphtha,” Maha Abdelmajeed, commercial manager at VTTI Fujairah Terminals, told the Fujairah Fuel Oil Forum (FUJCON) on Tuesday. above said.

Abdelmajeed added that the center is expected to generate strong and healthy demand for storage in the future.

According to port statistics, Fujairah has a total storage capacity of 11.1 million cubic meters so far. Trade sources on the sidelines of the forum said existing storage tanks were already at full capacity.

Statistics show that Fujairah will see record oil cargo volumes in 2022, with nearly 12,500 vessels calling at its sea anchorages.

Martijn Heijboer, business development manager at the Port of Fujairah, said the port’s throughput rose by about 10 percent last year amid a restructuring of trade flows.

“There is still some uncertainty this year because the (Russian oil) price cap only started in February,” Heijboer said, adding that there was still room for growth in shipping volumes and storage demand due to new projects.

Fujairah will open a dry bulk export facility at Dibba, adding about 18 million tonnes to its total handling capacity.

Onshore stocks in Fujairah will average 11.47 million barrels (1.81 million tonnes) per week by 2022, up from 10.26 million barrels (1.62 million tonnes) in 2021, according to the Fujairah Petroleum Industrial Zone. More recently, storage has risen sharply following the imposition of sanctions on Russian oil products in February and increased exports from Kuwait’s Al Zour refinery.

Russia has been selling crude and refined products at discounted prices in the wake of international sanctions, while the UAE has taken more Russian crude, according to ship-tracking data and sources.

Russian fuel oil has also flooded Middle Eastern markets since last year, with little sign of abating despite the recent price ceiling imposed by Russian oil products.

“I don’t think the price cap has much of an effect … In any case, most of the Russian oil is priced below the price cap,” Andrew Lavin, chief commercial officer at Saudi Industrial Export Company, told the forum.

Instead, the price caps on petroleum products that went into effect on Feb. 5 may have some impact on refining margins, Laven said.

Meanwhile, Paul Kelly, regional fuels director at Vitol Bahrain, said the price cap was meant to “keep the flow of oil” rather than “stop it”.

(Reporting by Jeslyn Lerh, Editing by David Goodman and Marguerita Choy)

(c) Copyright Thomson Reuters 2023.