Oil Price Drop Hurting OW Bunker

Denmark’s OW Bunker, a global marine fuel (bunker) company, changed its full-year profit guidance from a previously expected increase in profit for the year in line with the growth in marine fuel transaction volume, to a full year result around 20% lower than the result of 2013, due to the recent slide in the oil price, in particular during September.

The slide is outside the range expected and OW Bunker will as a consequence of its risk management policy report an unrealized accounting loss before tax of approximately USD 22 million in Q3 2014.

“We have seen an exceptional fall in the oil price in the recent weeks and there is considerable uncertainty about the short-term development.

In accordance with our policy, we have taken action to minimize risks against further oil price falls, and the associated costs leads us to lower our full-year profit guidance. 

If the oil prices rise again, we will gain on our derivative contracts, but it is unlikely that such gain will be adequate to offset our short term costs and allow us to meet the previously announced earnings forecast for the year,” said OW Bunker CEO Jim Pedersen.

The company says that the oil price (Brent crude futures) jumped to a 9-month high in the second half of June 2014 due to geopolitical turmoil. Since then, the oil price has fallen by around 20% to USD 92, the lowest level in over two years.

OW Bunker still expects to grow marine fuel transaction volume in 2014 by approximately 10% compared to 2013, as previously announced.