U.S. Navy to ship jet fuel from Japan to Korea

By Luke Pachymuthu and Randy Fabi

SINGAPORE (BestGrowthStock) – The U.S. Navy is looking to transport jet fuel to South Korea from Japan, describing the shipment as routine even though shipping and energy brokers said such trade normally moves in the other direction.

The United States is involved in joint military maneuvers with South Korea this week and with Japan next week. Both come less than 10 days after North Korea fired scores of artillery rounds into a South Korean island near the disputed northern maritime border.

The navy entered the freight spot market this week to charter an oil tanker to move at least 30,000 tons of jet fuel, used by the U.S. military to power everything from tanks to fighter planes, between the two Asian countries.

The U.S. military on Wednesday said the shipment was routine and unrelated to current events on the peninsula.

“This is a routine request for proposals by Military Sealift Command to move fuel on behalf of the Defense Energy Support Center (DESC), and is unrelated to current events on the Korean peninsula,” Jeff Davis, a U.S. Navy commander with the 7th Fleet, said in a statement to Reuters.

But traders said flows of jet fuel into South Korea were rare.

“This is definitely unusual,” said Nikhil Jain, a Delhi-based analyst with Drewry Shipping Consultants. “This has to do with the re-positioning of the U.S. warships.”

KOREA-BOUND

The U.S. Navy is a regular buyer of jet fuel in Asia, typically asking for delivery to Japan or the Middle East, traders and shipbrokers said.

“South Korea is a major jet fuel exporter, so imports are rare,” a Singapore-based jet fuel trader said. “The U.S. Navy could secure jet fuel if it wanted in South Korea, but with the recent activity it may need to transfer more fuel there.”

The Yonhap news agency said on Wednesday that South Korea was planning more military drills as the nuclear powered USS George Washington moved out of Korean waters back to Japan.

Shipbrokers said the U.S. navy was looking to load in Okinawa, Japan and discharge in Ulsan, South Korea.

A cargo of the size specified would be enough to keep one of the George Washington’s F-18 fighter jets in the air for between 1,000 and 1,700 hours, according to Reuters calculations.

The U.S. Navy, which only trades with U.S. shipbrokers, has not chartered a spot cargo to ship jet fuel to South Korea for at least three years, according to Reuters Freight Views.

Clean tanker rates on the benchmark Singapore-Japan freight route have climbed to a six-month high this week, partly due to high seasonal demand from North Asia, traders said.

Asian premiums for December jet fuel over gas oil hit a 10-month peak of $1.65 by midday.

“Winter is historically a strong season for jet because of heating demand anyway, but if there is further demand due to (the Korean situation) we could see the regrade hitting $2.00 soon,” said a Singapore-based distillates trader.

(Additional reporting by Jennifer Tan and Francis Kan in Singapore, Jeremy Laurence and Kim Miyoung in Seoul and Yoko Kubota and Osamu Tsukimori in Tokyo; Editing by Michael Urquhart)

U.S. Navy to ship jet fuel from Japan to Korea