Myanmar coup casts doubt over fuel imports

A recovery in Myanmar’s fuel imports in late 2020 could be snuffed out amid political uncertainty after the military seized power there on Monday, February 1, 3 trade sources said.

Myanmar has been a bright spot for refined fuel in Southeast Asia since it ramped up imports in December and January to pre-COVID-19 levels, while renewed lockdowns in Indonesia and Malaysia have reduced demand, they said.

Myanmar’s fuel imports, however, could dip in February after the government cut off communication lines and access to banks following the detention of Aung San Suu Kyi and other leaders of her National League for Democracy (NLD) party.

“Buyers [in Myanmar were already] holding off incremental volumes for February…a little bit nervous about tension in the country,” one of the sources said.

“Demand had dropped already because of COVID-19 and this has compounded the issue to a certain extent.”

Oil traders in Myanmar had been in talks to buy fuel for February, but trade halted on Monday after the government cut off internet and phone lines while banks were closed, one of the sources with a major trading firm said.

He said potential curfews and worry that the United States may impose sanctions could hurt oil demand and trade further.

The United States has called on Myanmar’s military to respect the outcome of recent elections but has not yet threatened sanctions. The United States has in the past imposed sanctions on Myanmar and its top military officers over the suppression of democratic forces and alleged human rights abuses.

The 3 trade sources declined to be named due to sensitivity of the matter.

Myanmar’s fuel imports rebounded in December and January, returning to pre-COVID-19 levels, after the country lifted COVID-19 restrictions that were in place for most of the 2nd half of last year, the sources said.

Gasoil imports rebounded to about 340,000 tons in December, raising the monthly average to 306,000 tons for 2020, up 11% from the previous year, said one of the sources, who tracks Myanmar’s imports closely.

Gasoline imports rose to about 184,000 tons in December, the source said, bringing the monthly average to 172,000 tons for the year, down 7% from 2019.

Myanmar’s imports have been helping to support Asia’s fuel markets at a time when Indonesian imports have slowed and Malaysia is exporting fuel.

“In the east, there is not much demand,” said the source with a major trading firm. – Rappler.com