• 3 minutes "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 9 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 1 day GREEN NEW DEAL = BLIZZARD OF LIES
  • 7 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 5 days Energy Armageddon
  • 3 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 20 hours "Forget Oil, The Real Crisis Is Diesel Inventories: The US Has Just 25 Days Left" by Zero Hedge - 5 Stars *****
  • 1 day "The Global Digital ID Prison" by James Corbett of CorbettReport.com
  • 24 mins Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 23 hours "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 1 day The Federal Reserve and Money...Aspects which are not widely known
  • 3 days Is Europe heading for winter of discontent with extensive gas shortages?
  • 10 days Wind droughts
  • 2 days Goldman Betting on Cryptocurrencies
  • 10 days Putin and Xi Bet on the Global South

Heavy Crude Oil Becomes More Affordable After OPEC+ Eases Cuts

At least one part of the oil industry should be happy about OPEC+’s easing of production cuts beginning this month, and this part is refiners who have been forced to boost their intake of high-sulfur fuel oil to replace heavy crude their refineries need but cannot get.

U.S. sanctions on Venezuela and Iran have been one reason for the deficit of heavy crude that gave refiners a headache and forced them to switch to high-sulfur fuel oil as an alternative feedstock, but the OPEC+ cuts also contributed to the shortage, Bloomberg writes in a report. As a result, these refiners had to switch to so-called dirty fuel oil, a byproduct of crude oil refining. Some refiners that are not equipped for handling the fuel oil had to shut down because the feedstock became too expensive.

This deficit occurred during a seasonal jump in consumption of the heavy oil derivative: in the Middle East, imports of high-sulfur fuel oil rise during the summer months because it is used for electricity generation and demand for electricity rises during the hottest season of the year. At the same time, India was buying more high-sulfur fuel oil, too, with imports from January to July three times higher than imports for the same period of last year.

Meanwhile, production of high-sulfur fuel oil has shrunk following the entry into effect of new emissions regulation from the International Maritime Organisation, which mandates that vessels either use fuel that contains no more than 0.5 percent of sulfur content or equip with a so-called sulfur scrubber.

As a result of this combination of trends, the deficit on the high-sulfur market reached half a million barrels daily last month, Bloomberg reports, citing figures from JBC Energy. Thanks to the relaxation of OPEC+ production cuts, this should ease to some 100,000 bpd by the end of the year.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment
  • Maxander on August 05 2020 said:
    The crude oil production cut has been eased but only modestly.
    OPEC+ decided to ease 900,000 bpd of production cut right now when around 85-90% pre-covid demand is already back on track compared to its almost close to 10,000,000 bpd production cut decided some months back.
    So this tells us that supply from OPEC+ likely to remain lower & we will keep on seeing weekly inventory or supply levels dropping widely.
    The ease is really modest, won't see any big price correction for oil.

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News