US navy seeks to move jet fuel in rare Japan-Korea route

The United States navy is seeking a medium-range oil tanker to move at least 30,000 tonnes of jet fuel from Japan to South Korea, industry sources said on Wednesday, at a time of heightened military tension on the Korean peninsula.

The transport route is unusual for jet fuel, shipping sources said, but an unnamed US military official said shipments of fuel for operational use are standard.  

"We don't have any information on what you are talking about in terms of the contracting," the US military official said.

"There is no particular movement that has taken place in  response to an incident in terms of large delivery of jet fuel or anything else."

The United States is involved in joint military manoeuvres with South Korea this week and with Japan next week. Both exercises 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 request for a jet fuel shipment from Japan caught the attention of the local shipping industry.

"They are looking to book this vessel for a period of up to 60 days," a Singapore-based shipbroker said.

The US navy is normally buyer of jet fuel in Asia, but delivery to South Korea is unusual, shipbrokers said.    

"I have not seen them moving (jet) from Japan to South  Korea, unless maybe South Korea doesn't have enough jet," the  shipbroker said.

But traders said there was no apparent tightness in the  jet fuel market, suggesting that the US navy could be stockpiling the aviation fuel.

"They are being proactive... They are just stocking up in (South Korea)," said a Singapore-based shipbroker.   

"They are building up the local tanks."

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.

The United States airforce operates a facility in Ulsan which has storage tanks for jet fuel, sources said.                                           

Only US shipbrokers are eligible to deal with the naval request, sources said.

Clean tanker rates on the benchmark Singapore-Japan freight route climbed to a six-month high this week on strong seasonal demand from North Asia.

Asian trade for December jet fuel hit a 10-month peak of $1.65 by 0430 GMT.

Winter-related kerosene stockpiling in North Asia and depressed gas oil prices due to heavy supplies have boosted the spread, traders said.

"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.