HOUSTON (Reuters) – The marine industry’s January 2020 shift to using very low sulfur fuel oil (VLSFO) to power ships worldwide will launch a one- to five-year disruption in oil and refined products markets, according to a study released Thursday by Boston Consulting Group.
The International Maritime Organization (IMO)’s mandated switch will require fuels to have a sulfur content below 0.5%, compared with 3.5% now. It aims to improve human health by reducing air pollution from sea-going vessels.
Changeover - Profits - Refiners - US - Gulf
The changeover may increase profits for refiners, especially on the U.S. Gulf Coast, where plants are designed to process high-sulfur crudes. It could also benefit producers of shale oil, which has a lower sulfur content than other varieties, the study found.
Conversely, prices for high-sulfur fuel oil (HSFO) or bunker fuel, with a maximum sulfur content of 3.5%, will fall as demand erodes, according to the study.
“The effects will be more than...
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