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Why Crude Quality Matters

Rig

The market is obsessed with the geopolitical issues that surely impact the trend, up or down, for crude pricing. Will the U.S./Iran sanctions kerfuffle turn in to something more? Will the U.S. and China learn to play “nice” on the trade front? And, finally, will U.S. shale production continue its relentless rise in months and years to come. Those are the big three. The key drivers that have the strongest impact on the direction crude prices take currently.

As an analyst, part of my job is to look down the road a bit and check for other factors that might play a role in oil and oil-related equities prices. It’s easy to document the day to day changes in the big three mentioned above. I honestly could write several articles a day, as the pace of events makes one out of date almost as soon as it’s published. That said, there have been a couple of things niggling at me, that may play a greater role in the future, and I thought now might be the time to trot them out for inspection.

Two things that I think are worth putting on the “sticky-note parking lot”, are crude quality and the impact of IMO 2020. These will soon start to have an impact on crude economics, as relates to the price we pay at the pump. Our focus in this article will be on the impact of crude quality, with just a brief word on IMO 2020.

First, a brief word on what is meant by “crude quality”

If you are a novice to the industry (Unlikely for…




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