The demand for oil storage in Fujairah increased, in conjunction with the change in the movement of crude trade after Western sanctions against Moscow, which diverted the path of Russian barrels towards the Middle East and Asia.
It is expected that the demand for oil storage and transit volumes in the port of Fujairah – the third largest refueling center in the world – will reach record levels during the current year, with the continuation of Russian flows.
Russia worked to change its compass towards Asia and the Middle East after Western governments imposed an embargo on Moscow’s crudes and set maximum limits on the prices of petroleum products, which prompted Moscow to offer its products at reduced prices in a number of new markets.
Russian oil flows
“The port witnessed a large flow of Russian oil barrels, especially Urals and naphtha,” said the commercial director at Fujairah Ports (VTTI) Maha Abdul Majeed – at the 13th Fujairah International Refueling Forum (Fogcon 2023) -.
Russian barrels of oil have been pouring into popular ship-to-ship transportation hubs in the Middle East and Asia since last year as Western sanctions altered trade flows.
Abdul Majeed added that the center is expected to record strong and healthy demand for storage in the future, Reuters reported.
The total oil storage capacity in Fujairah is 11.1 million cubic meters so far, more than 70 million barrels, according to port statistics.
The port of Fujairah includes the first dock for VLCCs, which is the deepest in the world, at a cost of 650 million dirhams ($176.97 million).
The port of Fujairah began storing oil with an estimated capacity of 550,000 cubic meters in 1994, before it reached more than 11 million cubic meters now.
oil storage
Huge projects are underway to increase the storage capacity of the port of Fujairah, the main center for oil storage, not only in the UAE, but also in the Middle East, as it is the third largest refueling center in the world.
Commercial sources said on the sidelines of the forum that the tanks are at full capacity, Reuters reported.
Statistics showed that Fujairah recorded a record year in terms of oil shipments in 2022, as nearly 12,500 ships arrived in the anchorage area.
The director of business development at the port of Fujairah, Martin Hejbauer, said that amid changing trade flows, volumes at the port increased by about 10% last year.
The number of oil storage tanks in Fujairah is about 150, with an estimated capacity of more than 10 million cubic meters, equivalent to 64 million barrels. During 2022, between 70 and 75 million barrels of crude oil and oil derivatives were supplied.
“There is still some uncertainty this year, as price caps on Russian oil only started in February,” Hegbour added, noting that there was room for growth in transport volumes and storage demand due to new projects.
Fujairah plans to operate a dry bulk export facility at the port of Dibba Al Fujairah, which will add about 18 million tons of gross handling capacity.
Oil stocks in Fujairah
Oil inventories in Fujairah averaged 11.47 million barrels (1.81 million tons) per week in 2022, up from 10.26 million barrels (1.62 million tons) in 2021, based on data from the Fujairah Oil Industry Zone.
More recently, oil storage volumes in Fujairah jumped after sanctions were imposed on Russian oil products in February, and after Kuwait’s Al-Zour refinery boosted its exports.
According to ship tracking data and sources, Russia sells crude oil and refined products at reduced prices after international sanctions, while shipments of Russian oil received by the UAE increased.
Prices of Russian oil derivatives
Russian fuel oil has flooded the Middle East markets since last year, with few signs of abating despite the latest price controls for Russian derivatives.
“I don’t think the price cap really makes a big difference,” said Andrew Lavin, commercial director of the Saudi Industrial Export Company. “Most of the Russian oil has been priced below the price ceiling anyway.”
Lavigne added that the caps on oil product prices, which began on February 5, may have some impact on refining margins.
Meanwhile, Paul Kelly, head of regional fuels at Vitol Bahrain, said price caps are in place to “keep the oil flowing, not stop it”.
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