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The death and transformation of fuel oil

The global fuel oil market is still adapting to the momentous  changes forced upon it by the IMO 2020 spec change.

JBC ENERGY expects1, as it did in 2017, that fuel oil will remain the primary bunker fuel at least throughout the new decade. That said, the two million b/d shift from high sulphur fuel oil (HSFO) to 0.5% very low sulphur fuel oil (VLSFO) completed in recent weeks has irreversibly fragmented the fuel oil market. This fragmentation is transforming business dynamics by ushering in a new three tier fuel oil market consisting of VLSFO, High Sulphur Straight Run fuel oil (HSSR), and cracked high sulphur fuel oil (cracked HSFO).

The fact that we are now past the most acute phase of HSFO-to-VLSFO bunker fuel transition, and the HSFO market structure is not only not in deep contango, but actually backwardated, (throughout the whole of 2020 no less) is a clear sign of this fuel oil fragmentation. The industry can no longer talk about a unified fuel oil market even ...

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