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European HSFO Supply to Remain Short in 2025: Argus

OIL PRODUCTS
StoryEnergy BulletsCommodities

A sustained reduction in global supply is expected to keep European HSFO prices and margins elevated in 2025, Argus said.

  • The potential for sudden drops in refinery output will support HSFO margins, assuming Europe continues its ban on Russian oil products.
  • In 2024, Europe imported sour fuel oil from various countries, with Iraq being the largest supplier. Falling fuel oil output in Russia, due to increased upgrading capacity, will indirectly pressure European HSFO stocks.
  • If middle-distillate crack spreads remain weak, demand for higher-sulphur feedstocks may be subdued, allowing excess sour fuel oil to enter the marine fuels market, where HSFO demand is strong.
  • As the Mediterranean Emissions Control Area takes effect, demand for LSSR fuel oil will rise, especially for vessels without scrubbers.
  • High demand in 2024 has increased competition for Algerian LSSR. Despite lower Algerian exports, Nigeria's Dangote refinery has balanced supply with significant LSSR exports, mainly for blending, Argus said.
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A sustained reduction in global supply is expected to keep European HSFO prices and margins elevated in 2025, Argus said.

  • The potential for sudden drops in refinery output will support HSFO margins, assuming Europe continues its ban on Russian oil products.
  • In 2024, Europe imported sour fuel oil from various countries, with Iraq being the largest supplier. Falling fuel oil output in Russia, due to increased upgrading capacity, will indirectly pressure European HSFO stocks.
  • If middle-distillate crack spreads remain weak, demand for higher-sulphur feedstocks may be subdued, allowing excess sour fuel oil to enter the marine fuels market, where HSFO demand is strong.
  • As the Mediterranean Emissions Control Area takes effect, demand for LSSR fuel oil will rise, especially for vessels without scrubbers.
  • High demand in 2024 has increased competition for Algerian LSSR. Despite lower Algerian exports, Nigeria's Dangote refinery has balanced supply with significant LSSR exports, mainly for blending, Argus said.