Viewpoint: IMO offers only hope for gasoil demand

Spanish Market: Oil products
23/12/19

European diesel margins are likely to remain relatively low in the coming months as demand continues to face headwinds, but new marine fuel regulations offer some chance of support depending on how the shipping industry adapts.

The International Maritime Organisation (IMO) regulation to limit sulphur content in marine fuels to 0.5pc could lead to a rise in demand for gasoil-based fuel, although this is looking less certain with 0.5pc very-low-sulphur fuel oil likely to be favoured over marine gasoil (MGO). As this became apparent, northwest European diesel cargoes fell from a $20.26/bl margin to North Sea Dated crude in mid-October to less than $14/bl by the end of November, a process aided by rising crude prices.

The most likely support for diesel margins in the early months of 2020 will be if the shipping industry turns back towards gasoil. Overall European gasoil demand has been in decline for most of 2019, when the continent experienced a slowdown in industrial activity. The IHS Markit manufacturing purchasing managers' index (PMI) has been below 50 — signalling contraction — since February, and demand appears likely to remain weak for at least the first quarter of 2020.

Consumer sentiment is likely to turn even more sharply against diesel-fuelled vehicles as environmental concerns persist. Diesel models accounted for only 26pc of Europe's overall car sales in the first 10 months of 2019, down from 32pc in the same period of the previous year, according to the European automobile manufacturers' association. Europe's overall car sales fell by 0.7pc in the same period. EU legislation on use of renewable fuels will again eat into diesel demand in 2020.

Diesel production in Europe will probably be strong in the first quarter of 2020 after several of the continent's largest refineries completed maintenance work in the final months of 2019, although some outages will remain: a fire at Total's 240,000 b/d Gonfreville refinery in France in December will keep the plant's only crude distillation unit (CDU) offline for months.

Gasoil imports to Europe appear ample as 2020 begins. India has displaced the US as Europe's third-largest gasoil supplier after Russia and Saudi Arabia. Around 8.5mn t of Indian-origin gasoil arrived at ports in the Mediterranean, northwest Europe and the Baltic states in the first 11 months of 2019, up from 6.6mn t in the same period of the previous year, according to oil analytics firm Vortexa.

Imports from the US fell to 8.1mn t from 8.4mn t, as Brazil positioned itself to produce IMO-compliant marine fuels and pulled in higher volumes of US diesel as a result. Europe's imports of US diesel grew as 2019 drew to a close: US diesel stocks swelled and refinery outages temporarily lifted European prices. Flows on the route could rise in 2020 if IMO 2020 supports European prices relative to those in the US.

But imports from India could recede in early 2020, as the monsoon season comes to an end and the country's car sales show signs of recovering. India began to export sharply higher volumes of diesel as domestic demand for the product fell in every month from August to October. Demand grew by just 1pc on the year in the first 10 months of 2019, compared with 9pc a year earlier.

Russia will remain Europe's biggest source of gasoil in 2020. It comfortably retained that position in the first 11 months of 2019 when it was the origin of nearly 47pc of the continent's imports. Saudi Arabia, the second largest supplier, contributed around 18pc. Two major Saudi refineries — the 460,000 b/d Satorp Jubail and 400,000 b/d Yasref Yanbu — will undergo major turnarounds in the first quarter of 2020, which could temporarily disrupt product exports.

By Benedict George

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28/04/25

Power outage hits Spanish refineries: Update 2

Adds details on flight cancellations London, 28 April (Argus) — A massive power cut across the Iberian peninsula has disrupted operations at several refineries, chemical plants and airports in Spain and Portugal today. All five of Repsol's Spanish refineries have been forced to shut, a union representative for the company's workers said. This includes the 220,000 b/d Bilbao refinery, which is operated by Repsol's Petronor subsidiary. Crews are in place, securing units at the refineries. "There is sufficient autonomy in all of them to guarantee the safety of the facilities," the union representative said. Repsol has yet to respond to a request for comment. Fellow Spanish refiner Moeve said it also has halted activity at its refining and chemical plants in the country and is using back-up power generators "to guarantee the safety and control of the system". Moeve operates the 244,000 b/d Algeciras and 220,000 b/d Huelva refineries. Its 250,000 t/yr San Roque base oils plant is also shutting down. Chemicals firm Dow said all plants at its Tarragona industrial complex in Spain have been closed. The longer the power outage lasts, the longer it will take to restart integrated sites. Refineries affected by power outages normally require a 2- to 3-day restart period. It is unclear yet whether any plants have sustained damage. Airports in both countries have also been affected, with 29pc of flights cancelled at Lisbon, according to data from analytics firm Cirium. A total of 96 flights from Portuguese airports have been cancelled today, according to Cirium, while 45 have been cancelled in Spain. Spanish transmission system operator Red Electrica and relevant government bodies are investigating the cause of the blackout. Red Electrica said power has been restored "at substations in several areas in the north, south and west of the peninsula, and consumers in these areas are beginning to be supplied". By George Maher-Bonnett, Isabella Reimi, Alex Sands and Monicca Egoy Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Power outage hits Spanish refineries: Update

28/04/25

Power outage hits Spanish refineries: Update

Adds new details throughout London, 28 April (Argus) — A massive power cut across the Iberian peninsula has disrupted operations at several refineries and chemical plants in Spain today. All five of Repsol's refineries have been forced to shut, a union representative for the company's workers said. This includes the 220,000 Bilbao refinery which is operated by Repsol's Petronor subsidiary. Crews are in place, securing units at the refineries. "There is sufficient autonomy in all of them to guarantee the safety of the facilities," the union representative said. Repsol has yet to respond to a request for comment. Fellow Spanish refiner Moeve said it has also halted activity at its refining and chemical plants in the country and is using back-up power generators "to guarantee the safety and control of the system". Moeve operates the 244,000 b/d Algeciras and 220,000 b/d Huelva refineries. Its 250,000 t/yr San Roque base oils plant is also shutting down. Chemicals firm Dow said all plants at its Tarragona industrial complex in Spain have been closed. The longer the power outage lasts, the longer it will take to restart integrated sites. Refineries affected by power outages normally require a 2-3 day restart period. It is unclear yet if any plants have sustained damage. Spanish transmission system operator (TSO) Red Electrica and relevant government bodies are investigating the cause of the blackout. Red Electrica said power has been restored "at substations in several areas in the north, south and west of the peninsula, and consumers in these areas are beginning to be supplied". By George Maher-Bonnett, Isabella Reimi, Alex Sands and Monicca Egoy Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Power outage hits Spanish refineries

28/04/25

Power outage hits Spanish refineries

London, 28 April (Argus) — A massive power cut across the Iberian peninsula has disrupted operations at several refineries in Spain today, sources told Argus. Spanish firm Repsol's Petronor subsidiary halted all units at its 220,000 Bilbao refinery earlier because of the power cut, with black smoke released as part of the security stoppage, market participants said. Shutdowns are also under way at Moeve's 250,000 t/yr San Roque base oils plant and at Repsol's 135,000 b/d La Coruna refinery, sources said. Flaring has been seen at Repsol's 180,000 b/d Tarragona refinery as a result of a response system being activated at the site, according to petrochemical sources. Moeve and Repsol have yet to respond to a request for comment. "The refineries need to be brought to a safe state," a trade union representative for Repsol workers said. "The crews are in place, securing the units. There is sufficient autonomy in all of them to guarantee the safety of the facilities." Chemical sites will also be affected by the power outage. The longer the power outage lasts, the longer it will take to restart integrated sites. Refineries affected by power outages normally require a 2-3 day restart period. It is unclear yet if any plants have sustained damage. By George Maher-Bonnett, Isabella Reimi and Alex Sands Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump works to blunt renewables growth

28/04/25

Trump works to blunt renewables growth

Washington, 28 April (Argus) — US president Donald Trump has started to impede development of renewable energy projects he sees as boondoggles, but he is facing challenges to his attempts to halt government funding and tax credits for the sector. Trump has attacked wind turbines and solar projects as part of a "Green New Scam" that should not be built, based on his preference for the fossil fuel-fired and nuclear power plants he says are more reliable and affordable. Trump selected a cabinet of like-minded individuals who oppose renewables and see little urgency to address climate change. He was elected to end the "nonsense" of building renewable resources that are heavily subsidised, make the grid less reliable and raise costs, energy secretary Chris Wright said in an interview on Earth Day. Interior secretary Doug Burgum on 16 April ordered Norwegian state-controlled Equinor to "immediately halt" construction of the 810MW Empire Wind project off New York. Trump had already ordered a freeze on future offshore wind leases , and suspending Empire Wind's permits is likely to spook investors even outside the renewables sphere. To reverse course on a fully permitted project is "bad policy" that "sends a chilling signal to all energy investment", American Clean Power Association chief executive Jason Grumet says. The US last week separately said it would impose anti-dumping duties on solar components imported from four southeast Asian countries that will range from 15pc to 3,400pc. Those duties — in effect from June to support US solar manufacturers — will be in addition to a 10pc across-the-board tariff the US imposed this month on most imports. Solar industry groups have said that steep import duties will make new installations unaffordable, stunting the industry's ability to grow. Trump has had less success in his push to axe support for renewables approved under Joe Biden. On 15 April, a federal judge ordered the administration to unfreeze billions of dollars for clean energy projects provided by the Inflation Reduction Act (IRA) and 2021 infrastructure law. The administration lacks "unfettered power to hamstring in perpetuity two statutes", judge Mary McElroy wrote. In a separate ruling on 15 April, judge Tanya Chutkan prohibited the administration from suspending $14bn in grants distributed to nonprofits under the IRA for a greenhouse gas reduction programme. The administration is appealing both rulings. Targeting the windfall Trump could further undermine the growth of renewables by convincing Republicans in Congress to use an upcoming filibuster-proof budget package to repeal or narrow the IRA's tax credits for wind, solar and other clean energy projects. Critics of that law see the potential for $1 trillion in savings by repealing its tax credits, which could offset the costs of more than $5 trillion in planned tax cuts. But there appear to be enough votes in each chamber of Congress to spare at least some of the IRA's energy tax credits. In the Senate, where Republicans can only afford to lose three votes, Alaska's Lisa Murkowski and three other Republicans signed a joint letter this month saying "wholesale repeal" of the tax credits would fuel uncertainty and undermine job creation. In the House of Representatives, where Republicans have a similarly slim majority, 21 Republicans voiced concerns earlier this year about repealing all of the tax credits. Renewables are on track to overtake natural gas as the largest source of US electricity by 2030 — assuming the tax credits and climate rules enacted under Biden remain intact — the EIA stated this month in its Annual Energy Outlook . The amount of power from renewables under the EIA's existing policy baseline by 2035 will increase by 135pc to 2.8bn MWh, while gas-fired power will decline by 14pc to 1.6bn MWh over the same time period. By Chris Knight Baseline US net power generation Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US tariffs create uncertain jet fuel outlook

25/04/25

US tariffs create uncertain jet fuel outlook

Houston, 25 April (Argus) — US airlines are signaling an uncertain outlook for jet fuel demand, with most withdrawing 2025 financial guidance because President Donald Trump's evolving tariff plans have made it difficult to predict travel demand. Delta Air Lines , American Airlines , Southwest Airlines and Alaska Airlines all withdrew financial guidance for the full year when reporting first-quarter earnings this month. Global economic uncertainty prompted United Airlines to provide two outlooks , one based on a weaker but stable economy and a second scenario in which the US falls into a recession. The uncertain demand outlook comes even as jet fuel costs are 11-15pc cheaper than a year earlier, with prices projected to fall to a 4-year low in 2025 . Much of the uncertainty stems from Trump's high and repeatedly changing tariff levels. He has imposed an across-the-board 10pc on imports from most trading partners, 25pc on some imports from Canada and Mexico and 145pc on most imports from China — and separately, a 25pc tariff on imported steel, aluminium, cars and auto parts. Beijing has responded with a 125pc tariff on imports from the US. The growing trade war has prompted the IMF to significantly lower its outlook for global economic growth in 2025-26. With no clear path on how to navigate the changing political and economic landscape, businesses and consumers have grown more cautious. Domestic and international air travel began to falter last month as Trump rolled out his trade policies. US airline passenger volumes declined by 15pc to 16.48mn passengers in the week ended 8 March, down from an eight-month high in the week prior. Brewing anti-American sentiment and concern about US immigration policy also may be lowering global demand for air travel to the US. The number of European travelers to the US totalled 1.03mn in March, lower by 15pc from the same month last year. This was the first time that European arrivals in the US fell on the year since March 2021, during the Covid-19 pandemic. By Craig Ross Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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