Ship fuel suppliers in Asia and the Middle East are returning to open account terms, some six weeks after they sought less risky letter of credit (L/C) payment terms in the wake of a major market shock.

The suppliers turned to L/Cs in November after the world's largest ship fuel supplier, OW Bunker of Denmark, filed for bankruptcy (DC World News, 12 November 2014).

Open account

The market reacted by refusing open account terms and suppliers demanded cash up front or L/Cs, industry sources said at the time.

Traders now say that the market is returning to normal, with suppliers once more offering open account terms.

Market forces

Fuel suppliers are hoping that the return to open account terms will boost sales since bunker fuel prices across key ports in Asia and the Middle East have hit five-and-a-half-year lows.

The market has been depressed by low oil prices and weak demand.

Investigations

Denmark's largest pension fund and eight other large investors as well as Danish prosecutors have initiated investigations into the collapse of OW Bunker, which had been valued at US$1 billion when it listed at the end of March.

Danish investigators have already arrested one former OW Bunker manager and intend to hand him toItaly, where he is suspected of fraud.

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