Heavy Sour Crude Shortage Disrupts IMO 2020 Response Increase your knowledge of the oil market to stay informed.
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Despite expectations to the contrary, the price premium for clean-burning 0.5% sulfur marine fuel oil and
high-sulfur 380 CST bunker fuel at the U.S. Gulf Coast declined steadily from nearly $11/barrel in early
January to less than $2/barrel during the first week of March.
by the International Maritime Organization mandate the use of 0.5% sulfur fuel oil by marine shipping in
10 months' time, on Jan. 1, 2020. Last year, that impending requirement widened the spread between
low- and higher-sulfur marine bunkers as traders bet that demand for high-sulfur fuels would evaporate
in the runup to the new regulation.
This note looks at how low-sulfur premiums are evaporating this year
in response to a Gulf Coast shortage of heavy sour crude, disrupting shipowners scrambling to comply
with the new rules.
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