IMO 2020 may not solve crude oil quality riddle: Fuel for Thought

The global chasm in crude oil quality supply shows no signs of narrowing, prompting refiners to lighten their slate and leading to a market awash with gasoline , naphtha and LPG. New restrictions next year on the amount of sulfur in global marine fuels may mean refiners buy even more US shale oil , but this may not put an end to a saturated light ends market. Much hinges on demand. The meteoric rise in US production over the past decade — almost doubling to record highs of around 12 million b/d — shows little sign of slowing in the near term. As light sweet US shale floods the market, producers of heavier, more acidic varieties have been cutting back due to OPEC-led output cuts to the tune of 1.2 million b/d. US sanctions on key exporters like Venezuela and Iran have choked off more than 1 million b/d and even cuts from the US’s northern neighbor Canada have tightened the sour oil market. There appear few answers to the supply side of the ledger. Even oil’s supermajors, once burned by forays into the Permian and other important shale plays, are muscling in once again on the US independents, while… continue reading

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