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Trump Tweet Sends Oil Soaring 25%

Oil prices spiked on Thursday…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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The World's Most Expensive Oil Nears $100 Per Barrel

Strong demand for heavy-sweet crude grades amid the new shipping fuel regulations has resulted in a recent spot tender in which a crude from Australia sold for close to US$100 a barrel, making it what traders said was probably the most expensive crude in the world.

According to the new rules by the International Maritime Organization (IMO), only 0.5-percent or lower sulfur fuel oil should be used on ships beginning January 1, 2020, unless said ships have installed the so-called scrubbers—systems that remove sulfur from exhaust gas emitted by bunkers—so they can continue to use high-sulfur fuel oil (HSFO).

In the run-up to the kick-off date of the new rule, demand for heavy and sweet crude grades was high as those are the most suited for processing into low-sulfur fuel for ships.  

And this month, Australian company Santos sold a 550,000-barrel cargo of the Pyrenees crude grade for loading in March, at a premium of over US$30 over the price of Dated Brent, trade sources told Reuters.

The Pyrenees crude has a gravity of 19.3 API with 0.19 percent sulfur content, according to the latest crude assays seen by Platts.

Considering that Brent Crude is around US$65 a barrel, the US$30-plus premium over Dated Brent means that the cargo sold for nearly US$100 a barrel.

“Heavy sweet crudes like those from our Van Gogh and Pyrenees fields are well suited for fuel oil blending to meet the new environmental requirements and are currently in very high demand,” a spokeswoman for Santos said in an email to Bloomberg.

“It is probably the world’s most expensive crude,” a trader based in Singapore told S&P Global Platts, commenting on the sale of the cargo.

While Australian crude grades fetch crazy premiums over the new IMO rules, the world’s largest oil company, Saudi Aramco, is not changing its crude offerings to accommodate demand for lower-sulfur and lighter grades, Mohammed Al Qahtani, Senior vice president, Upstream, at Aramco said on Tuesday, as carried by S&P Global Platts. 

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on January 14 2020 said:
    It is simply the law of supply and demand no more and no less.

    In three to four years’ time, this will be a common price for all types of crude oil given the steep decline in oil discoveries which in 2019 was the worst in the last seventy years and the growing demand for oil.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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