Navigating choppy waters

Multiclient study on marine bunker fuel in a low sulfur, low carbon world

Could the International Maritime Organization (IMO)’s plan to reduce the sulfur content of marine bunker fuel, from 3.5% to 0.5% as of January 2020, create the most disruptive impact on oil markets from a planned event?

The study will primarily focus on a deep-dive into 2 key aspects of the IMO 2020 transition:

  • Regional residue supply and demand modelling: Regional balances of LS and HS fuel supply, demand and trade in the IMO transition period
  • Shipping and refining industry scenario analysis: Scenario analysis of the key variables which will define the magnitude and duration of the IMO 2020 impact on the oil markets. Principle scenarios will be compliance level and scrubber uptake, but also refinery project delays and potential regulatory transitional measures intended to smooth the transition. IHS Markit will apply a Monte Carlo style probabilistic analysis to the scenario output, to create probability disruptions for market prices and refinery margins

Additionally, the study will provide insight on:

  • Discussion on refining and ship owner strategies for achieving the bunker fuel rules
  • Latest data on ship scrubber technology, availability, cost and timing of installation and scrubbing economics and installation payback using the scenario analysis. Overview of open and closed scrubber technology
  • Summary of current global legislation and discussion on potential future legislation (and possible delays). Compliance outlook including waivers, LS Bunker available and other sanction relief mechanisms being considered
  • Quantify how storage of HS fuel oil might address some oversupply during transition period. Discuss role of market timing structure and flat price risk in estimating the suitability of this option
  • Provide IHS Markit view on influence of crude oil quality and crude production response to IMO 2020
  • Initial assessment of refinery blending components for the new formulations of 0.50%S bunker fuel and discussion on their potential compatibility, handling and other fit-for-use issues
  • Potential impact on global lubricant market as a result of VGO market tightening as some VGO is used to supply the bunker fuel market
  • Potential impact on shipping operating costs, global freight rates, shipping economics, scrubber demand and accelerated ship scrappage using the scenario analysis output- Potential impact on shipping operating costs, global freight rates, shipping economics, scrubber demand and accelerated ship scrappage using the scenario analysis output
  • High-level review of the recent CO2 emission reduction targets, set by the IMO for 2030 and 2050, known available methods to compliance and influence on ship owner strategies for the 2020 bunker fuel sulfur transition

Download the Prospectus



Infographic: Final findings of IMO Study - Navigating Choppy Waters



Additional Insights:

IMO 2020 Regulation - Standards, Compliance and Outlook for Marine Fuels

Complete this form to have a discussion with our research team

required fields