Fuel Oil Market Overview
- The supply market size was expected to decline at a CAGR of 4.77% by 2020.
- Fuel oil is the only petroleum product, whose demand is expected to fall in the long term.
- Health and environmental concerns related to the high sulfur content of residual fuel oil have led to new policies and regulations that have significantly lowered expectations for future residual fuel oil use globally.
- The global fuel oil market weathered the storm in 2020, grappling with the significant change triggered by the International Maritime Organization’s (IMO) worldwide sulfur cap as well as the demand disruption due to the COVID-19 pandemic.
The report provides an extensive fuel oil analysis of the key price drivers, supply-demand trends and trade dynamics of global fuel oil manufacturers in North America, Europe, APAC, LATAM, Africa and the Middle East. It further discusses Porter's Five Forces Analysis and presents a Fuel oil price forecast trends analysis in North America, Europe, APAC and LATAM regions. The report includes an in-depth study of the fuel oil companies such as ExxonMobil, Royal Dutch Shell, and British Petroleum along with their SWOT analysis.
Beroe gathers intelligence through primary sources that include industry experts, researchers, and consultants, as well as current suppliers, producers and distributors. Secondary sources can include business journals, newsletters, magazines, market research data, company sources, and industry associations. Following data collation, analysis, and strategic review, the Final Research Report is published on Beroe LiVE.
Fuel Oil Market Trends
The demand for 0.5% sulfur marine fuel oil surged during the beginning of 2020, as the IMO 2020 norms came through and made it the preferred bunker fuel. This resulted in unprecedented wide spreads between 0.5%S marine fuel oil and 3.5% high-sulfur fuel oil (HSFO) across the globe.
However, for stakeholders who invested in scrubbers, the fuel oil market price rise was momentary. Marine fuel industries squeezed under pressure in February 2020 amidst the amplifying COVID-19 pandemic, which diluted intermediary opportunities and left global oil industries to struggle with product surplus.
While fluctuations from IMO 2020 were expected during the initial phases of 2020, the scale of fluctuation faced by bunker players due to the collapse of the worldwide oil demand was beyond imagination.
Demand for transport fuel oil reduced due to physical distancing and travel restrictions, but was more severe in land and air transport fuel oil, with a majority of worldwide trade occurring on the high seas. Demand for gasoline, jet fuel oil, and diesel came under squeezing pressure amidst the nationwide lockdowns, compelling oil refineries to decrease their production.
Fuel Oil Market Trends
Category Intelligence on Fuel Oil covers the following
- Information relating to market, supply, cost, and pricing analysis
- Hard to find data on cost and TCO models, supplier details, and performance benchmarks
- Macroeconomic and regional trends impacting cost, supply, and other market dynamics
- Category-specific negotiation and sourcing advice
Industry Outlook & Drivers
Fuel Oil Global Market Outlook
- The global fuel oil supply stands at 5.129 Mbpd
- The global fuel oil demand stands at 3.571Mbpd
- Demand is expected to drop at a CAGR of 6.30 percent from 2016 to 2020
Fuel Oil Demand Market Outlook
- IMO regulations will have the effect on prompting the switch among users from fuel oil to diesel
- The electricity sector is moving away from fuel oil, and this is expected to lessen the demand of fuel oil
- Large reductions in residual fuel oil demand are likely to occur from the decreased use of fuel oil for power generation and space heating
- The shift from fuel oil-based heating in ships by 2020 is estimated to leave a vast amount of excess heavy fuel oil, which will be available, most likely at a hefty discount
Global Market Size - Fuel Oil
- The supply market size is expected to decline at a CAGR of 4.77 percent by 2020
- Fuel oil is the only petroleum product, whose demand is expected to fall in the long term
- Health and environmental concerns related to the high sulfur content of residual fuel oil have led to new policies and regulations that have significantly lowered expectations for future residual fuel oil use globally
Global Capacity–Demand Analysis
- The demand for HFO is forecast to decline over the next two years because of the trend toward greater use of natural gas for power generation
- Regulations toward the use of cleaner fuels in the shipping industry will also bring down the demand for HFO
- Refinery output for fuel oil is expected to decrease 4.08 percent between 2018 and 2020
Demand Outlook
- Large reductions in residual fuel oil demand will likely come from decreased use of fuel oil for power generation and space heating
- In the power sector, the cost of pollution controls, maintenance, and RFO heating often offset the lower cost of fuel oil when compared to natural gas and other more expensive fuels. Consequently, power sector demand for RFO, especially in industrialized countries, is expected to decrease.
- Saudi Arabia has been one of the few countries that has increased its fuel oil intake, largely because they have realized how uneconomical it is to use their own crude oil for power use
Supply Outlook
- New refining capacity is concentrated in locations where demand is growing, notably APAC.
- The supply is estimated to decrease due to the lower demand for fuel oil. This is caused mainly due to the stringent environmental policies that are being followed globally.
- The IMO has set a 0.50% limit (maximum) of the sulphur content in respect of all fuel oils used by any type of combustion machinery outside the Emission Control Areas from 1 st of January 2020, down from 3.50% m/m currently.
Global Demand by Application
- Demand for light products and middle distillate is expected to grow, while residual fuel is set to see a decline in usage.
- Bunker gas oil and low-sulfur fuel oil to replace high-sulfur fuel oil, due to IMO specifications for sulfur content.
- IMO regulations call for global standards for sulfur content in marine fuel to be tightened to 0.5% from 3.5%.
Downstream Demand Outlook
- IMO regulations will have the effect of prompting a switch among users from fuel oil to cleaner fuel.
- Share of the petrochemicals sector is forecast to increase from 13% in 2017 to 15% in 2040.
- Residual fuel, as an energy source, is expected to lose weight, as it is expected to be replaced by natural gas as an alternative source of energy.
- The electricity sector moving away from fuel oil is expected to add downward pressure on the use of fuel oil.
- From January 2020, the limit for sulfur in fuel oil used on board ships operating outside designated emission control areas was reduced to 0.50% m/m.
- The shift from fuel oil-based heating in ships by 2020 is estimated to leave a vast amount of excess heavy fuel oil, which will be available, most likely at a hefty discount.
Cost Structure Analysis
- Product costs include raw material cost, which is crude oil.
- The product costs also include refining costs that can be broken into equipment, maintenance, and labor costs.
- Overhead costs include marketing cost, utility cost, and employee cost.
- Other costs are taxes and regulatory compliance costs.
- Distribution costs include transportation and inventory carrying costs.
- Transportation costs are subject to increase with an increase in distance.
- Inventory costs keep increasing until the goods are sold.
- A slower economy in China, weak global demand for crude, and volatile decisions by OPEC overproduction cuts are expected to reduce crude prices.
Why You Should Buy This Report
The report on the fuel oil market provides an extensive analysis of the key price drivers, supply-demand trends and trade dynamics of global manufacturers in North America, Europe, APAC, LATAM, Africa and the Middle East. It further discusses Porter's Five Forces Analysis and presents a fuel oil price forecast trends analysis in the pre-set regions. The report includes an in-depth study of the fuel oil companies such as ExxonMobil, Royal Dutch Shell, and British Petroleum along with their SWOT analysis.
Beroe gathers intelligence through primary sources that include industry experts, researchers, and consultants, as well as current suppliers, producers and distributors. Secondary sources include business journals, newsletters, magazines, market research data, company sources, and industry associations. Following data collation, analysis, and strategic review, the Final Research Report is published on Beroe LiVE.
