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How will IMO 2020 impact fuel prices?

From 1 January 2020, a new 0.50% global sulphur cap on marine fuels will come into effect. This is a significant reduction on the 3.50% global limit which is currently in force and the new cap is certain to have a dramatic and immediate impact on the shipping, bunkering and energy sectors. These sectors will have to work together to meet this new challenge.

Senior figures in the maritime community have said that the enforcement of the new global cap will “turn the whole bunkering industry upside down.” This is true – but it is a revolution that has been a long time in the making.

Questions about IMO 2020?

We’ve got the answers. Here’s what you need to know about the impending marine diesel regulations expected to impact all fuel supply chains in January 2020:

What are the potential negative impacts?

The immediate impact of the sulfur cap will of course increase the price volatility of all fuel. This means that all refiners and ocean carriers are currently exercising plans to alleviate higher transportation figures. While the refiners and carriers analyze whether or not they’re going to switch to LNG bunkers (liquid natural gas), install scrubbers, or simply burn the new VLSFO (very low sulfur fuel oil), your business should be preparing how to mitigate these upcoming supply chain disruptors.

How does this affect your business?

The implementation of the IMO 2020 regulations is expected to impact every industry because it’s expected to 'displace about 2 million barrels per day of high-sulfur fuel oil..that will certainly have upwards price pressure on global energy prices, and it will impact both marine and domestic fuel costs, and will fundamentally change how the market operates’ - Vander Zanden.

The new sulfur regulation also means that transportation will be slower so that shippers can reduce the amount of fuel they’re consuming, additionally with the scarcity of the new VLSFO, ships will have to make more stops. All of this means longer wait time for your land-based business. Businesses with a solid understanding of how IMO regulations can impact their shipping times will be best prepared come January 2020.

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What can you do now?

The best way to prepare for IMO 2020 is to make sure that your business is able to mitigate risks effectively. With 35 years of expertise in both global and land marine industries, World Fuel Services is uniquely qualified to aid you in navigating these uncertain waters. Our team of industry experts will be there to guide you through protecting against price volatility without hedging, and coordinating contracts to ensure the disruption to your supply chain is as minimal as possible.

Discover More

White Papers

2020 Vision: Preparing for the new global sulphur cap

The 2020 deadline was recently confirmed at the 70th session of the IMO Marine Environment Protection Committee. 

Webinars

Do you how IMO 2020 could impact your business?

Our 40 minute webinar discusses expected impacts on diesel as well as regulation changes.