Alphatanker says US opposition poses the greatest threat to the introduction of the 2020 IMO global sulphur cap.
Efforts to delay the legislation could be ramped up given Donald Trump’s concern that it could trigger a spike in fuel prices with a presidential election due in November 2019.
The 0.5% sulphur cap is increasingly on Trump’s radar, says Alphatanker.
It is feared that if any increase in global gasoil prices feeds through to road and rail freight, where ultra low sulphur fuel is used, the higher cost will be passed on to consumers.
Trump is also concerned that he could lose core support if the price of gasoline, used widely by motorists, increases.
Gasoline prices have been a “hot potato” for previous presidents and “any price rises ahead of an election would likely lead to voter unrest,” Alphatanker adds.
The administration, however, could face strong opposition from the domestic oil industry which stands to “reap the benefits of the global sulphur cap.”
The US will be the main source of incremental low sulphur crude oil until the middle of the next decade, says Alphatanker.
The analyst notes that price rise fears culminated in an attempt by the US, together with a number of prominent flag states and industry bodies, to push for an ‘experience building phase’ at last October’s IMO Marine Environment Protection Committee meeting.
Exact details remain vague but it is thought that the cap would instead be phased in and not strictly policed until all technical issues, including compliant fuel availability, have been resolved, says the analyst.
Certain quarters have labelled this plan a “delay” in all but name.
Alphatanker says gasoil price rises seem certain.It projects marine gasoil strengthening by around 30% over 2019 and then remaining high as global demand outstrips supply.
