High-sulfur fuel oil demand to decline on IMO rules
High-sulfur fuel oil demand will fall 60 percent next year while marine
A new 0.5 percent sulfur content cap in shipping fuel set by the International Maritime Organization (IMO) will come into effect in 2020, one of the biggest fundamental events to hit oil markets in years.
Refiners and shipping firms have had years to prepare, but disruptions are still anticipated. Vessels will have to stop using high sulfur fuel oil (HSFO) unless they install filters, or use far more expensive compliant fuels.
A fuel type designed to meet the new cap, very low sulfur fuel oil (VLSFO), will initially be in limited supply, and quality discrepancies at different ports mean shippers are likely to stick to another compliant but pricier fuel, marine
In 2020, “demand for HSFO... will fall from 3.5 million barrels per day to 1.4 MMbpd,” the IEA said in a report. “Demand for marine
The IEA expects VLSFO demand to reach 1 MMbpd in 2020 and 1.8 MMbpd by 2024, while marine
A slight shortfall in marine
One solution for shipping firms is to install sulfur filtering units on board, known as scrubbers, which would allow vessels to continue burning cheaper HSFO.
The IEA estimates that about 4,000 scrubbers will be installed by 2020, consuming around 680,000
As HSFO demand drops, the IEA expects the unwanted product to be used for cement plants and power generation particularly in the Middle East, where 11 gigawatts of new power capacity is being installed, mainly in Saudi Arabia.
The agency also expects a significant level of non-compliance in the first year of the new regulations due to the shortfall of VLSFO. It expects non-compliant vessels to account for 16 percent, or 700,000
Looking ahead to 2024, annual
Refiners are expected to raise their
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