Baku, Azerbaijan, Feb.27
By Leman Zeynalova – Trend:
The International Maritime Organisation’s (IMO) major change limiting the airborne sulphur dioxide emissions from international shipping will drive all crude prices higher, Trend reports citing the outlook of Wood Mackenzie research and consulting company.
In general, the company expects the following changes after the IMO rules take effect:
The cost of ocean freight - and so international waterborne trade - will increase as shippers need to invest or buy more expensive fuels;
Refinery earnings should improve, as tighter fuel quality standards requires higher activity levels by the refining sector, for which it will earn a margin;
The relative value of crude oils will change, as high sulphur, heavy crudes will become less valuable than today. This will have an impact on the Upstream sector and has the potential for this legislation to drive all crude prices higher;
The consumer will pay for the change in a number of ways, as this legislation alters the relative values of all refined products. It is likely the cost of air travel will increase, as will road freight costs;
Airborne emissions from the shipping sector will fall, but overall environmental performance may change little as the pollutants can be diverted into the marine environment;
There is a wide range of potential outcomes depending upon how the shipping and refining sectors respond to this legislative change.
“The surge in gas oil demand would require refiners to process more crude and we would be in an era reminiscent of the early 2000s, when strong demand growth for clean fuels drove up the global price of crude oil, distorting crude pricing and product pricing relationships. This would deliver enormous profits for the refining sector, but history suggests such distortions are often short-lived,” said the company.
The International Maritime Organisation’s (IMO) major change limiting the airborne sulphur dioxide emissions from international shipping is now less than a year away.
On 1 January 2020, the sulphur dioxide emission standard tightens to limit the emissions to burning the equivalent of fuel with a sulphur content less than 0.5 percent.
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Follow the author on Twitter: @Lyaman_Zeyn
