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ESAI Energy report examines possible effects of IMO’s sulfur cap on bunker fuels

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Hydrocarbon Engineering,

ESAI Energy has published a report that examines potential effects of the International Marine Organization’s (IMO) 0.5% sulfur content cap on bunker fuels on transport fuel markets through 2023.

According to ‘Five-Year Global Fuels Outlook’, when implemented in 2020 the sulfur cap will lead to a 1.0 million bpd increase in demand for marine gasoil and a 900 000 bpd decline in residual bunker fuel consumption. In response, refiners will raise throughput and leverage existing capacity to meet higher gasoil demand, and in the longer term invest in additional upgrading capacity. The spike in gasoil demand will strengthen gasoil spreads to crude significantly, but weaken gasoline and fuel oil spreads as these markets become oversupplied.

In the publication ESAI Energy also examines changes in global product trade flows through 2023. ESAI Energy analyst, Ian Page, comments: “While the East of Suez middle distillate surplus expands and the regions gasoline balance moves to surplus, the Atlantic basin’s import requirement grows, resulting in a significant increase in East to West product movements”.

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