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SINGAPORE: Leading crude exporter Saudi Arabia is maximising refining profits by importing unprecedented amounts of cheap Russian diesel and in turn shipping record volumes to Singapore, where the fuel can achieve higher margins, shiptracking data shows.
Russia has had to divert the volumes it sold to Europe, previously its dominant product market, after the European Union banned oil product imports in February as part of its response to Moscow’s invasion of Ukraine.
That allowed state oil giant Saudi Aramco to increase its May imports to Singapore to record levels and cash in on better arbitrage netbacks in the east than Europe, driven by tighter Asian supply during the maintenance season, traders and analysts said.
“Diesel supply in Singapore is relatively tight due to regional refinery maintenance, while Middle East supplies are rising, which may create spot arbitrage opportunities for traders to move the cargoes (to Singapore),” Vortexa’s head of APAC analysis Serena Huang said.
Saudi Arabia will import up to 500,000 tonnes (3.7 million barrels) or more of Russian diesel in May, with most of it arriving at Ras Tanura, where one of Saudi Aramco’s refineries is located, two trading sources, Kpler and Refinitiv showed.
At the same time, diesel from Saudi Arabia arriving in Singapore is set to hit 400,000 tonnes – an unprecedented level, data from Refinitiv, Vortexa and two industry sources found. The sources asked for anonymity because they were not authorised to speak to the media.
