- The rise in Kuwait’s Al Zour refinery exports could influence the VLSFO market.
- Russian fuel oil exports supply high-sulfur grades.
- Successful test runs at Dangote could lead to increased production and export of low-sulfur straight-run fuel.
Kuwaiti Exports: Al Zour Refinery Impact
The anticipated rise in Kuwait’s Al Zour refinery exports could influence the VLSFO market, potentially impacting prices in 2024. Recent fluctuations in export volumes, especially after prioritizing term deals, suggest a potential swing factor for low-sulfur markets. Analysts foresee a decline in VLSFO margins in Q1 2024 due to increased export volume, but a shift in local power generation demands might reduce surplus barrels available for exports by Q2, reports Nasdaq.
Russian Influx: Impact on HSFO Market
Russian fuel oil exports, driven by sanctions and an ample supply of high-sulfur grades, are expected to continue flooding Asian and Middle Eastern trading hubs in 2024. This surplus is likely to exert downward pressure on the HSFO market. Though concerns regarding potential sanctions on Russian oil shipments persist, the market remains sensitive to these available cargoes. Despite being top destinations for Russian fuel oil in 2023, traders believe that 2024 volumes in China and India might not surpass those of the previous year.
Emerging Capacities: Impact from New Refineries
Market watchers are keenly observing the progress of new refinery start-ups, such as the Dangote complex in Nigeria and coker units in Mexico. Successful test runs at Dangote could lead to increased production and export of low-sulfur straight-run fuel, potentially affecting VLSFO margins. Conversely, delays in coker unit start-ups at Pemex’s Tula and Salina Cruz refineries might result in more high-sulfur fuel exports, influencing the HSFO market.
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Source: Nasdaq
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