2020 Bunker Regulation – A Refined View (Study available from January 16th, 2017)

  • Limiting sulphur emissions from bunker fuel use to 0.5% globally in 2020 will impose substantial challenges on the industry, with a sustainable solution only likely to de-velop over a number of years. But the high level of uncertainty and presumably sharp and volatile price reactions will provide healthy margins to those in the industry who are positioned on the right side at the right time.
  • The refining sector will be key to the provision of compliant bunker fuel in 2020, as scrubbers will not find widespread implementation by 2020 and thus will need time to re-establish HSFO as the main bunker fuel.
  • Refiners will be able to provide sufficient compliant bunker fuel oil based on the available set-up and crude diet. But the knock-on effect of altered operations on crude and other product fundamentals will be significant, with strong price signals needed to provide the required incentives. The use of surplus HSFO will be one of the critical components in finding short-term and longer-term equilibria.