Oil traders are concerned about supply disruptions in the Malacca Strait after the Singapore Navy warned of possible terrorist attacks on tankers. But they said that alternative routes could be used though it would slightly add to costs.
According to Exim News Service, the diversion around Indonesia would add two to three days to sailing time.
Malaysia and Indonesia are bolstering security in the Strait of Malacca, through which flows at least 15 million barrels of oil each day, while Singapore also raised alert levels and beefed up security.
However, they cautioned that more than 30 tankers, crowding the waters off Singapore, Malaysia and Indonesia used as storage tanks for distillates, fuel oil and crude, may also be targets.
Shipping and industry groups have advised carriers to take extra care when passing through the Malacca Strait, and have increased vigilance on their vessels.
A trader said that in the event of an attack on a tanker, the loss of a single cargo might be a problem for the owner, "but it’s an opportunity for everyone else to sell at higher prices".
If the Strait was blocked after an attack, tankers could sail further south along the western coast of Indonesia’s Sumatra via the Sunda Strait and head north to Singapore, adding two to three days of sailing time.
Ships moving to North Asia could sail towards East Java via the Lombok Strait or Banda Strait.
This would, however, add $ 20,000-$ 30,000 per day to the cost of carrying diesel or kerosene on an 80,000-tonne tanker.
Traders also admitted that there were about five million tonnes of fuel oil and crude on board converted VLCCs anchored off Malaysia’s southern ports of Tanjung Pelepas and Pasir Gudang.