ESAI Energy: IMO sulfur content cap will destroy fuel oil demand

In its recent 5-yr outlook on petroleum products, ESAI Energy examines the implementation of the International Marine Organization’s (IMO) 0.5% sulfur content cap on bunker fuels, which is slated to take effect globally in 2020.

“If implemented as currently planned, the regulations will destroy 1.2 MMbpd of fuel oil demand and create a similar amount of marine gasoil demand,” said ESAI Energy in a press release. “Despite a steep reduction in fuel oil demand, non-compliance, waivers, and to a lesser extent the adoption of exhaust scrubbers, will drive the continued consumption of large volumes of high sulfur bunker fuel oil in the years after 2020.”

Meanwhile, the IMO bunker fuel rules will provide a major boost to diesel markets particularly in Asia and Europe as inland diesel demand growth slows over the next five years, the ESAI said.

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