Value of Canada's Heavy Sour Crude Undermined by Sulfur Cap Rule

by Ship & Bunker News Team
Friday June 8, 2018

Heavy sour crude oil, which is high in sulfur, could be sidelined under the International Maritime Organisation's (IMO) decision to cap the sulfur content in bunker fuel at 0.5%.

Around half of Canada's crude oil production comprises heavy sour crude oil which will become a harder sell once the demand from ships for high sulfur fuel oil evapourates in 2020.

"It's bad news for any producers of heavy, sour crude oil," Martin Tallett, president of Massachusetts-based oil market research firm EnSys Energy, was quoted as saying  by Canadian news provider the Vancouver Sun.

"The shock is going to go through the system and affect all products, all regions," Tallett added.

According to Tallett, the IMO2020 sulfur cap shipping rules could significantly increase the discount on Canadian heavy sour crude oil.

From the start of 2020, all ships must use compliant fuel. If they are still using high sulfur fuel oil to power their engines, the ships much have emissions abatement technology, also known as scrubbers, installed.