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Biggest Change in Oil Market 6 Months Away

Jul 16, 2019, 9:39 AM
News ID: 29516
Biggest Change in Oil Market 6 Months Away

EghtesadOnline: Tens of thousands of ships sailing the world’s oceans burn more than 3 million barrels of sludge-like high-sulfur fuel every single day. But, starting next year, the shipping industry will have to comply with rules that should dramatically reduce sulfur emissions.

“It is the biggest change in oil market history,” Steve Sawyer, senior analyst at energy consultant Facts Global Energy, told CNBC.

“It is going to affect crude oil producers, traders, ship owners, refiners, equity investors, insurance companies, logistical businesses, banks… Who’s left? I’m struggling to think of anyone it might not affect. That is why it is a huge transition,” Sawyer said.

With less than six months to go before the new rules on marine fuels come into force, CNBC took a look at the far-reaching consequences of the coming changes, Financial Tribune reported.

On January 1, 2020, the International Maritime Organization will enforce new emissions standards designed to significantly curb pollution produced by the world’s ships.

Amid a broader push towards cleaner energy markets, the IMO is set to ban shipping vessels using fuel with a sulfur content higher than 0.5%, compared to levels of 3.5% at present. The most commonly used marine fuel is thought to have a sulfur content of around 2.7%.

The new regulations are the result of a recommendation that came from a subcommittee at the United Nations more than a decade ago and was adopted in 2016 by the UN’s IMO, which sets rules for shipping safety, security and pollution.

More than 170 countries, including the US, have signed on to the fuel change.

Starting in 2020, ships found in violation of the new laws risk being impounded and ports in cooperating countries are expected to police visiting vessels.