If the threat of higher diesel taxes was enough to cause riots on the streets of Paris, then the impact of an obscure new rule forcing shipping companies to use cleaner fuels in commercial vessels has the potential to turn the “gilets jaunes” movement apoplectic with rage unless policymakers wake up to the danger. In just over a year, the International Maritime Organization, based in London on the banks of the Thames, will introduce radical new guidelines forcing shippers around the world to stop using dirty fuel oil and instead shift to low-sulfur marine diesel to help clean up the environment. However, the impact of the change will reverberate far beyond the world’s merchant fleets on the high seas. Demand for transport diesel is expected to surge as a consequence of the rules known as IMO 2020, while supply remains constrained by the ability of refiners to adapt quickly enough. According to the International Energy Agency, bulk wholesale prices for diesel could increase by up to 30% as ship operators scramble for supplies of cleaner marine fuels in order to comply and avoid potential penalties. Meanwhile, S&P Global Platts Analytics forecasts the shift could add $7 to the cost of… continue reading
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Source: CTRM Center