Traders scramble as Singapore fraud brings OW Bunker to its knees

This case could cause a wave of bankruptcy across the market.

Traders and shipping companies scrambled to source fuel and take over supply contracts on Friday after Danish marine fuel supplier OW Bunker said a suspected fraud at its Singapore subsidiary had pushed it to the brink of bankruptcy.

According to Reuters, the alleged fraud at Singapore-based Dynamic Oil Trading is potentially one of the biggest financial market scandals to hit the city state since 2004, when China Aviation Oil (Singapore) ran up oil futures losses of $550 million.

The company did not give any details of the alleged fraud, but several traders said the problem was likely related to the recent sharp fall in oil prices.

A bunker fuel trader in Europe said that many vessel owners and operators were cancelling their orders with OW Bunker, but that the fallout in the market would still be huge if the company went down without paying out its existing positions.

"This will have a huge impact on the market. It's not impossible that this will have a small domino effect. If they go bankrupt, financially less secure players will also go bankrupt," the European bunker trader said.

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