Asian gasoil margins at 2.5 year low; Are the new fuel rules to blame?

  • Jan 23, 2020 AEDT
  • Team Kalkine

The Gasoil cracks have fallen by 27% since the rule came into existence and cracks for gasoil (Gasoil Refining Profit Margins) with 10 ppm sulphur fell to a 2.5-year low of $11.70 a barrel over Dubai crude on 22 January 2020.

The refiners are facing the heat of the new International Maritime Organization fuel rules which bans usage of marine gasoils with sulphur content above 0.5 per cent  from 1 January 2020.

The sweeter MGO might require the refiners to upgrade their desulphurization units and incur more operating costs, shrinking their Gasoil cracks.

The demand expected from the ship owners is lower than the expected as few shipping operators switched to VLSFO (Very Low Sulphur Fuel Oil) and is expected to grow over a period of months.




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