Following a series of oil tanker attacks in the Middle East causing insurance costs to skyrocket, shipowners are keeping away from the region’s refuelling hub, to the benefit of another Asian market – Singapore.

According to a report by Reuters, many tankers plying the East Asia – Middle East routes are choosing to refuel in Singapore instead, while others are choosing smaller bunkering ports in India and Sri Lanka.

The report added that a ton of 380-centistoke (cst) high-sulphur fuel oil (HSFO) in Fujairah has slipped from an average of US$5 to US$10 premium over Singapore in May to a discount of $30-$70 over the past two week, citing industry sources who wished to remain anonymous due to company policy.

“US$50 per ton below Singapore? Bargain, if you can cover the war risk premium,” a Singapore-based marine fuels trader for a major commodities seller was quoted as saying by Reuters. “There is overwhelming evidence that vessels are avoiding Fujairah and that is causing surging demand in Singapore.”

Since May, attacks on tankers in the Strait of Hormuz and the Gulf of Oman areas have caused marine insurance rates to rise up to ten-fold, which led ships to avoid spending time in the region unless really necessary.

On top of annual war risk premiums, shipowners pay a ‘breach’ premium whenever the vessel enters a high-risk area. These are calculated according to the ship’s value for a period of seven days.

According to the report, marine insurers are charging a breach rate of 0.35% up to 0.5% as of two weeks ago. This means additional costs of up to US$100,000 for a very large crude carrier (VLCC) to make a seven-day trip to the region.