Singapore’s third-largest bunker supply company Ocean Bunkering Services (OBS) has ceased bunker deliveries due to the withdrawal of short-term credit by its lenders
News service Reuters reports Ocean Bunkering Services Pte Ltd (OBS), a subsidiary of one of Singapore’s oldest trading companies, Hin Leong Trading Pte Ltd, is in talks with lenders to extend credit after some banks failed to provide the firm with a letter of credit to buy an oil products cargo. OBS is reported to have delivered bunkers it has already paid for or for which it had been able to arrange credit, but without the extension of credit, it will not be able to secure further oil products to satisfy scheduled stems in Singapore.
Three stems of bunkers scheduled for delivery today (17 April) have been cancelled, according to Reuters.
OBS is one of the biggest bunker suppliers in the region. It has consistently been in the top 10 bunker suppliers by volume in the highly competitive Singapore bunker supply hub. In 2019, OBS was ranked as the third-largest supplier. If the company has ceased to supply bunkers in Singapore, as reported by Reuters, its place will quickly be taken by the many other suppliers in the region. In theory, there will be no impact on the ability of Singapore to maintain its position as the dominant bunker supply hub.
The real impact is in the tightly woven network of credit supply upon which the bunker supply industry depends. According to Singapore-based newspaper The Straits Times, banks have a combined exposure of US$3Bn to OBS. It reports that as many as 10 banks are involved, with HSBC having the largest exposure of US$600M. The news of OBS’ troubles will ripple through the suppliers of finance to the bunker trade. Credit managers will be re-pricing the risk and trade credit will become more expensive and available amounts smaller.
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