Poten & Partners senior analyst Erik Broekhuizen has waded through the 400 pages of OPEC’s annual World Oil Outlook, which forecasts global oil demand through 2040, to discover the cartel’s thinking on the 2020 global sulphur cap.
The headline news is “OPEC thinks that it will have a noticeable impact on crude runs,” said Mr Broekhuizen in his weekly opinion.
Interestingly, OPEC seems to believe there will be a significant level of non-compliance of up to 30%, citing a lack of scrubbers and compliant fuel availability.
Mr Broekhuizen interprets this scenario to imply that, while the use of low sulphur fuel oil and gasoil will initially jump in 2020, the increased penetration of onboard scrubbers will support continued use of high sulphur fuel oil over time.
Some of the oil majors have already shown which fuels and lubricants will be available, and OPEC believes there will be an increase in demand from North American refiners for medium and heavy sour crudes from Latin America and the Middle East.
This and an increase in demand for US light sweet crudes will boost tonne mile demand and lead to a 400,000 b/d increase in 2020 directly from the IMO regulation.
However, Mr Broekhuizen warns “This 400,000 b/d increase is based on a lot of assumptions and, even if they all fall into place, it can be neutralised if owners order just 10 additional VLCCs.”
The operational realities of the 2020 sulphur cap will be discussed in detail at Riviera Maritime Media’s Asian Sulphur Cap 2020 Conference which takes place 24-25 October 2018 in Singapore.