- The Trump Administration plans to slow down the IMO regulation rollout to avoid spike in fuel oil prices.
- IMO has set January 1, 2020 as the start date for the new regulation.
- Hi-lo market, dropped to $99/mt on ICE on Friday in Europe, from $103.25/mt on Thursday.
A writer for the U.S.-based consulting firm says in an article that, Europe’s fuel oil market was rattled on Friday. The Trump Administration may look to slow down the introduction of the new regulations limiting sulfur content in ship fuel in order to stave off a potential spike in fuel oil prices that would burden consumers and businesses.
IMO regulations
The International Maritime Organization (IMO) has set January 1, 2020, as the start date of the new IMO rules on using only 0.5-percent sulfur fuel oil on ships, unless ships have installed scrubbers—systems that remove sulfur from exhaust gas emitted by bunkers.
The US was concerned that fuel costs will spike with nearing IMO cap kick start, the Wall Street Journal reported.
Gradual phasing of IMO cap possible?
The Trump Administration is looking to slow down the rollout by gradually phasing in the new regulations, in order to “mitigate the impact of precipitous fuel-cost increases on consumers,” the White House said in an email to The Wall Street Journal.
A White House spokesman told The Journal that the United States wasn’t looking to withdraw from the agreement on the new regulations, and the Trump Administration’s plans were not to delay the implementation of the sulfur-cap rules.
Political grounds?
Some officials within the administration admitted that the timing of the new regulation would have political implications in a presidential election year.
“Few things terrify an American president more than a spike in fuel prices,” Bob McNally, a former energy adviser to former President George W. Bush, told The Journal.
Hi-lo market slide
After the reported U.S. pushback on the IMO regulations, Europe’s fuel oil market was shaken on Friday, brokers and fuel oil traders told S&P Global Platts.
The 2020 spread between high sulfur fuel oil of 3.5 percent and the low sulfur fuel oil of 1 percent, known as hi-lo in the swaps market, dropped to $99/mt on ICE on Friday morning in Europe, from $103.25/mt on Thursday.
“We have seen [Trump] pull out of bigger things,” a fuel oil trader told Platts. The IMO 2020 regulation is big for the fuel oil market, “but in comparison to the other deals he has pulled out of I think it is in keeping,” the trader noted.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Oil Price
