Pacific Money | Economy | Southeast Asia

Brunei Pumps More Oil

The Masjid Sultan Omar Ali Saifuddin Mosque in Bandar Seri Begawan, Brunei.

Brunei is a boutique storefront in the $3 trillion global oil market.

The Southeast Asian nation’s amber-hued crudes are prized by refineries for their clarity and low sulfur content. A premium fuel like SLEB (Seria Light Export Blend) sells in small quantities but typically costs more than Brent crude, the industry benchmark.

Yet even Asia’s high-grade crudes were not immune to the energy market’s wild swings in March and April, a reaction to the Strait of Hormuz blockade.

Brunei’s “light sweet” crude prices are pegged to Malaysia’s Tapis, a regional benchmark. In April, Tapis was trending slightly above $100 a barrel while the cheaper Brent crude soared to an 18-year high of $141 on the spot market.

The light sweet market “flipped to a discount,” noted a report from the Organization of the Petroleum Exporting Countries.

Price volatility, coupled with a global fuel crisis, triggered a surge of orders for light crude oils. Brunei exported 105,000 barrels per day in April, the highest level in five years, according to Kpler, a Brussels-based data company that tracks commodity flows. The Star, a Malaysian newspaper, labeled Brunei one of the energy “winners” of the Persian Gulf conflict.

Nearly 70 percent of Brunei’s April oil exports were shipped to Thailand. Refineries took advantage of the price flip in premium crude even as officials in Bangkok struggled to procure supplies from the United States and Brazil to ease the country’s fuel shortage. Thailand is heavily dependent on Middle Eastern oil, with 50 percent of its imports transiting the Strait of Hormuz.

“We are, of course, advocating for diversifying,” said Kaja Kallas, while on a visit to Brunei in April. The EU’s foreign policy chief was co-chairing the biennial meeting of the Association of Southeast Asian Nations (ASEAN) and European Union (EU) foreign ministers. She urged the region’s oil importers to reconsider purchasing Russian crude amid the........

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