- IMO rule requires ships to use fuels with a sulphur content of no more than 0.5%, down from 3.5% before.
- Refiners around the world have responded by boosting VLSFO production.
- With adequate supply and increase in demand, there is also an increase in fuel price.
According to an article published in Economic Times Energy World, global supplies of marine fuel compliant with new environmental rules are increasing fast as concerns over quality remain marginal, the International Energy Agency said.
IMO mandate
International Maritime Organization (IMO) rules that took effect on January 1 mandates ships to use fuels with a sulphur content of no more than 0.5%, down from 3.5% before, unless they are equipped with exhaust-cleaning systems known as scrubbers.
An adequate supply of VLSFO
Despite initial concerns late last year about availability of very low-sulphur fuel oil (VLSFO), the preferred compliant marine fuel, supplies at key hubs now seem adequate, the global energy watchdog said in its monthly report.
“We are starting to see the first data on the transition and, it appears that deliveries of the new VLSFO bunkers are increasing fast,“ the IEA said.
Demand sees an increase in prices
Concerns that the VLSFO, which is a blend of high-sulphur and low-sulphur fuel, could damage engines are less prominent, the IEA said.
The strong demand for VLSFO has led to a sharp increase in its price in recent months which sharply narrowed its spread with the more expensive marine gas oil (MGO).
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Source: ETEnergyWorld
