US Scoops Up Overseas Fuel Oil in Pre-IMO Push
11.11.2019 - NEWS

November 11, 2019 [New Age Business] – The United States is taking advantage of record-low prices of one of the world’s dirtiest fuels by buying record volumes, which it intends to upgrade into cleaner products before new shipping rules take effect, trading and analyst sources say.

US trade sources said that it recently had become economical to ship fuel oil from countries such as Russia, boosting imports of the product into the United States.

This comes even as prices for high-sulphur fuel oil (HSFO) on the US Gulf Coast trend lower while demand for high-sulphur fuels sags globally.

Fuel oil in the region traded at $41.56 per barrel on November 6, a three-year seasonal low, data from S&P Global Platts shows.

Fuel oil prices in Europe have also fallen to record lows, which has helped make exports to the United States economical.

According to data from oil analytics firm Vortexa, US imports of fuel oil from Russia and former Soviet Union (FSU) countries surged to at least a multi-year high of 1.35 million tonnes in October, and they are expected to hold firm at similar levels in November.

‘The broader rise in FSU-US flows since the beginning of this year has therefore helped to offset the impact of the collapse in Venezuelan fuel oil imports in the wake of US-led sanctions,’ Vortexa said.

Vortexa separately noted that the United States had received fuel oil from Jordan at the end of October, with another tanker set to arrive around the end of November. The route from Jordan to the United States is unusual, Vortexa said.

New regulations on marine fuel by the International Maritime Organisation that take effect on January 1 will restrict sulphur content in shipping fuels to a maximum 0.5 per cent, from 3.5 per cent now.

Complex US refiners have long been expected to benefit from the new regulations because they have greater capability to break down cheaper, heavy crudes into higher-margin, compliant products.

They have vacuum distillation capacity to break down straight-run fuel oil, which comes directly from a crude unit, as well as coking capacity, which upgrades cracked fuel oil, a by-product from complex refining methods.

The increased imports may be related to US refiners looking to run fuel oil directly to their cokers as the price of high-sulphur fuel oil declines ahead of IMO 2020, said Sandy Fielden, energy analyst at financial services firm Morningstar.

‘If fuel oil is a good deal cheaper than crude, you can run it direct to the coker to produce gasoline and diesel and increase refinery returns,’ Fielden said.

‘If it proves profitable then we should see more of it in the coming months as HSFO prices fall.’


Click Here to Access Today a 4,900 Tank Terminal Database With a Pro Trial
Click on the button and register to get instant access to actionable tank storage industry data

Analysis: China Crackdown Could Knock Crude Oil Import Growth to 20-year Low
07.26.2021 - NEWS
July 26, 2021 [Reuters] – Beijing’s crackdown on the misuse of import quotas combined... Read More
OPEC, Energy Industry Should Thank Saudi Arabia For Oil Price Recovery
07.26.2021 - NEWS
July 26, 2021 [OilPrice] – OPEC—as well as the entire energy industry—should be thankin... Read More
S. Korea's Hyundai Oilbank to Sell Oil Storage Terminal Stake to Fund Green Energy Projects
07.26.2021 - NEWS
July 26, 2021 [SPGlobal] – Hyundai Oilbank to focus on blue hydrogen project, to cut refini... Read More
Energy Giants Sell Off Assets
07.26.2021 - NEWS
July 26, 2021 [GlobalFinance] – GCC countries are selling prime assets to fund economic tra... Read More