Bloomberg reported on January 19 that Russian oil is allegedly blended in Singapore with other grades for subsequent re-export around the world.
The agency’s sources said demand for oil storage tanks has skyrocketed in the city-state. According to the publication, this allegedly indicates their use for mixing oil in order to hide its origin.
Bloomberg notes that Singapore has not banned the import of Russian oil and oil products, however, financial institutions of the state are prohibited from conducting transactions with goods and companies from the Russian Federation.
The publication assumes that oil from the Singaporean reservoirs will be re-exported to the markets of Northeast Asia.
William Tang, senior vice president of marine fuel consultancy Miyabi Industries, said traders could make a 20% profit from blending Russian fuel with other components.
“Some of this blended fuel could go to bunkering in Singapore or be sold to neighboring countries like Indonesia and Vietnam,” Tan said.
On December 5, 2022, an embargo on Russian oil supplied by sea to the European Union (EU) came into force. The EU states have agreed on an adjustable price ceiling for energy from Russia, transported by sea, at $60 per barrel.
In response, Russian President Vladimir Putin on December 27 signed a decree on retaliatory measures to introduce a ceiling on prices for Russian energy resources. According to the document, the supply of oil and oil products to foreign legal entities and individuals is prohibited, provided that these supplies directly or indirectly provide for the use of a price fixing mechanism.
Also at the end of 2022, Deputy Prime Minister of the Russian Federation Alexander Novak reported that in response to the price ceiling, Russia plans to ban the supply of oil and petroleum products to countries that will require compliance with this condition in contracts. In this regard, he added, the Russian Federation is ready to reduce oil production, which in early 2023 could be 5-7%.
At the same time, he expressed the opinion that energy resources from the Russian Federation will invariably be in demand in the world economic system, and stressed that the most important areas of global infrastructure depend on Russian energy exports.
On January 10, Reuters, citing a G7 representative, reported that the G7 countries intend to set two price ceilings for Russian oil products. It is specified that the G7 coalition seeks to set in February one price ceiling for products traded at a premium to oil, and another for those traded at a discount.