Fuel Oil Global Market Outlook

  • The global fuel oil supply stands at 6.574 Mbpd
  • The global fuel oil demand stands at 4.769 Mbpd
  • Demand is expected to drop at a CAGR of 4.08 percent until 2020

fuel-oil-global-market-sizeFuel 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 market size is expected to decline at a CAGR of 4.08 percent from 2018 to 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 the APAC
  • The supply is estimated to decrease, due to the lower demand in fuel oil. This is caused, mainly due to the stringent environmental policies that are being followed globally
  • IMO sets a 0.50 percent limit (maximum) of the sulphur content in respect of all fuel oils used by any type of combustion machinery outside Emission Control Areas from 1 st of January 2020, down from 3.50 percent m/m currently