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Downside Risk to Asia High-Sulfur Fuel Oil on Easing Venezuela Sanctions

OIL

High-sulfur fuel oil margins for Asian refiners are at risk of further downside after the US eased sanctions on Venezuelan oil according to FGE.

  • The easing of the US sanctions could result in more Venezuelan crude redirected away from China to US Gulf Coast refiners.
  • Supplies of high-sulfur straight (HSSR) run fuel oil from Mexico and the Middle East would likely head to Singapore, China and India with limited flows to US Gulf Coast refiners for use as a secondary feedstock.
  • China’s intake of HSSR could be limited as 95% of import quotas have been utilized by the end of September.
  • Low exports of low-sulfur fuel oil from Kuwait’s Al-Zour refinery in November are expected to support margins.

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