Bunker Consumption Outlook: Demand Expected To Increase Almost 90% in Developing Countries

OPEC expects fuel oil to be "almost entirely eliminated" from the European bunker markets by the end of 2040.

Robust economic growth, coupled with increasing trade between regions, will boost bunker demand in developing countries by 90 percent through 2040, while demand in the OECD region will see a slight decline, the Organization of Petroleum Exporting Counties (OPEC) predicts in its recently released World Oil Outlook 2015.

Overall, OPEC expects total demand to increase by 2 mboe/d between 2014 and 2040.

"Demand in the OECD region is forecast to show a marginal decline while that in developing countries is expected to increase almost 90%, with Other Asia, China and Latin America the biggest contributors," says OPEC.

The fuel oil / distillate product mix is also expected to change as a result of International Maritime Organisation (IMO) regulations set to put a 0.5 percent sulfur cap on marine fuel in 2020 or 2025.

"Currently residual fuel accounts for 82% of sectoral demand, with the remainder as gasoil/diesel," said OPEC.

"The use of gasoil/diesel in the marine bunkers sector will be further supported by the expected switching away from IFO as a result of IMO regulations regarding maximum sulphur levels. It is estimated that by 2020, 1 mb/d of IFO will switch to gasoil and 1.6 mb/d by 2040."

OPEC also expects fuel oil to be "almost entirely eliminated" from European markets by the end of 2040, declining by 0.7 mb/d to a level of 0.4 mb/d in 2040.

The key reasons for this decline were said to be the expected shift to diesel oil in marine bunkers, along with the further displacement of fuel oil in the power generation sector.

Elsewhere in its World Oil outlook 2015, OPEC noted that bunker demand has seen only marginal growth since 2008.