Phillips 66 (PSX), the Houston-based oil giant, has expanded its fuel oil storage capabilities in the Singapore and Malacca Straits by leasing the Southern Emperor, a floating storage vessel with a capacity of 300,000 metric tons, per a Reuters report. The move highlights the refiner’s efforts to enhance supply flexibility in one of the world’s most critical fuel oil trading and bunkering hubs.

Previously, Phillips 66 had partially rented the EM Splendour for fuel oil storage. However, securing a dedicated vessel provides the company with greater control over inventory management and trading operations in Asia’s dynamic energy market.

The Southern Emperor joins a fleet of 19 other floating storage vessels stationed along the Singapore and Malacca Straits, which collectively hold more than 2.6 million metric tons of fuel oil, according to shipping analytics firm Kpler.

Singapore, the world’s largest bunkering port, plays a crucial role in global fuel oil trade, with traders and refiners using floating storage to manage supply and price fluctuations. The region's strategic location at the crossroads of major shipping routes makes it a vital hub for fuel oil distribution across Asia and beyond.

The demand for floating storage has remained steady despite shifts in global fuel oil consumption patterns. While environmental regulations have driven a long-term transition toward cleaner fuels, high-sulfur fuel oil remains essential for vessels equipped with scrubbers. The continued presence of floating storage in Singapore reflects the market’s ongoing reliance on fuel oil for marine and industrial use.

Phillips 66’s latest move aligns with its broader strategy of optimizing supply chains and maintaining a competitive edge in the evolving energy landscape. By expanding its storage capacity in Singapore, the company strengthens its ability to meet regional demand while capitalizing on trading opportunities in the fuel oil market.

PSX’s Zacks Rank & Key Picks

Currently, Phillips 66 carries a Zack Rank #5 (Strong Sell).

Investors interested in the energy sector may look at some better-ranked stocks like Antero Resources Corporation AR, NextDecade Corporation NEXT and Viper Energy, Inc. VNOM. While Antero Resources and NextDecade presently sport a Zacks Rank #1 (Strong Buy) each, Viper Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources, one of the fastest-growing natural gas producers in the United States, boasts a strategic acreage position in the low-risk properties of the Appalachian Basin. The company has more than two decades of premium low-cost drilling inventory in the prolific basin, securing a strong production outlook. AR is well-positioned to capitalize on the increasing demand for LNG, both in the United States and globally. 

NextDecade is an emerging player in the LNG space with its Rio Grande LNG project in Texas. As demand for LNG continues to grow, NextDecade’s strategic investments in infrastructure and its planned liquefaction capacity provide strong upside potential. With the global LNG market expanding, the company is well-positioned to tap into the increasing export demand from the United States.

Viper Energy is a variable distribution MLP based in Midland, TX. It generates strong and steady royalty income from its royalty acres in the prolific Eagle Ford and Permian Basin, with active rigs providing ample growth potential. The business strategies of the partnership include acquiring mineral interests from third parties and the parent company. 

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