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Argus Media Viewpoint: US demand to drive European HSFO margins

European HSFO prices received support from US refinery demand in 2020, enabling margins of crude to remain above levels anticipated ahead of IMO 2020.

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Enes Tunagur of global energy and commodity price reporting agency Argus Media on Monday (4 January) published an article explaining how the unexpected rise in U.S. heavy residual feedstock demand affects market developments in 2021:

US refinery demand for heavy residual feedstocks will support European high-sulphur fuel oil (HSFO) prices in 2021, but developments in the Covid-19 pandemic, changes in US sanctions policy and in Opec+ production cuts may prompt changes in fuel oil trade routes.

European HSFO prices received strong support from US refinery demand in 2020, enabling margins to crude to remain above levels some had anticipated ahead of the International Maritime Organization (IMO) sulphur cap that came into force at the start of the year. The IMO lowered the maximum sulphur limit of marine fuels to 0.5pc, leading to some expectation that demand from the shipping industry would be sharply lower for the 3.5pc sulphur product.

But US refiners purchased a higher number of Russian high-sulphur residual cargoes in 2020, for processing as a substitute for heavy crude grades in their coking units to produce more road fuels. US plants also blend Russian high-sulphur straight-run (HSSR) fuel oil to run in crude distillation units (CDUs) instead of sour crudes, availability of which was sharply reduced in 2020 by Opec+ production cuts.

This unexpected transatlantic demand also softened the effects of a slowdown in European exports to Singapore, the world’s leading bunkering hub and the largest buyer of heavy fuel oil until 2020.

But, US refinery demand could ease in 2021 if Covid-19 subsides and road fuels demand recovers. This would probably increase crude unit run rates in the US. Any change in US policy towards Iran and Venezuela under the incoming administration of president-elect Joe Biden could reduce the need for alternatives to those countries’ sour crudes, but this is highly unlikely to materialise in the first half of 2021.

Increased crude production by Opec+ countries might lead to more heavy grades finding their way to refineries in Europe and the Americas, and consequently to higher HSFO production that lowers the need for Russian fuel oil imports. But, even with Covid-19 vaccines beginning to roll out it is unclear if and when road- and jet-fuel demand will recover to levels that would prompt higher refining run rates.

European HSFO margins will receive support in 2021 from power generation demand in Saudi Arabia, which is likely to continue a trend of higher HSFO imports to reduce direct crude burn. Lower production by Saudi refiners, driven by the same reasons as elsewhere, was another driver of the country’s higher HSFO imports.

A greater number of ships installed with the exhaust-cleaning systems known as scrubbers, which can still burn HSFO, has increased demand for the 3.5pc product, and sales of HSFO topped 1mn t in Singapore in October for the first time in 2020. Scrubber-related demand could boost HSFO sales in the first half of 2021, but this is likely to ease towards the end of the year by when most installations will be completed. A narrow spread between HSFO and IMO-compliant fuels will probably discourage future scrubber installations.

Very-low 0.5pc sulphur fuel oil (VLSFO) will probably hold its position as the primary marine fuel globally in 2021, as uptake of 0.1pc marine gasoil (MGO) failed to reach substantial levels. MGO’s share in global bunkering hubs dropped gradually until the end of 2020, as was just 13pc at Rotterdam in the third quarter. VLSFO stayed as the primary fuel at the European bunkering hub, with 46pc.

Robust VLSFO demand during the Covid-19 outbreak supported refining margins for the product at a time when road- and jet-fuel margins struggled to remain profitable. VLSFO kept its value until the end of 2020, making it one of the most valuable refinery products.

European VLSFO supply was sufficient to meet domestic demand in 2020, but export opportunities remained limited because of alternative suppliers for Singapore such as Algeria and Brazil. These exporters will likely continue supplying Singapore, which will curb European exports.


Photo credit and source:
Argus Media
Published: 6 January, 2020

 

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Incident

MPA: 25 crew rescued after abandoning “MSC HERMES III” east of Vietnam

MRCC Singapore coordinated the rescue after receiving a distress alert at about 8.45am as the vessel was within Singapore’s Maritime Search and Rescue Region.

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The Maritime and Port Authority of Singapore (MPA) on Tuesday (22 September) said all 25 crew members from the Liberia-registered container vessel MSC HERMES III were rescued on 22 September 2026. 

The Maritime Rescue Coordination Centre (MRCC) Singapore coordinated the rescue after receiving a distress alert at about 8.45am (Singapore Time). 

“The vessel was within Singapore’s Maritime Search and Rescue Region (MSRR), about 300km east of Vietnam,” MPA said in a statement. 

MRCC Singapore immediately issued a broadcast requesting vessels in the vicinity to render assistance. Three vessels responded, and MSC RUBY recovered all 25 crew members after they had abandoned MSC HERMES III in a lifeboat. 

“All 25 crew members are safe, with no injuries reported,” MPA said. 

“MRCC Singapore is coordinating with the Vietnamese MRCC on arrangements for the rescued crew members to return safely to shore.”

 

Photo credit: Manifold Times
Published: 23 September, 2026

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Alternative Fuels

GCMD, Equinor to combine expertise on alternative bunker fuels, decarbonisation solutions

Equinor brings extensive experience to partnership as a vessel charterer and marine fuel supplier, including chartering dual-fuel LNG and methanol tankers, testing biofuels and supplying methanol.

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GCMD, Equinor to combine expertise on alternative bunker fuels, decarbonisation solutions

The Global Centre for Maritime Decarbonisation (GCMD) and Equinor on Tuesday (22 September) announced a five-year Impact partnership.

The partnership brings together GCMD’s capabilities in conducting real-world maritime pilots with Equinor’s experience as a charterer, energy provider and developer of low-carbon solutions.

Together, the organisations will leverage their complementary expertise to help address technical and operational gaps in scaling alternative marine fuels and supporting the development and uptake of other maritime decarbonisation solutions.

GCMD’s work on alternative fuels, including biofuels, ammonia and methanol, focuses on two critical aspects of deployment: operational safety and robust monitoring, reporting and verification (MRV). Its pilots and studies are generating operational data to support safe bunkering and handling of these fuels. 

At the same time, its assurance work seeks to strengthen confidence in quantity, quality and GHG emissions abatement.

“Equinor brings extensive experience as a vessel charterer and marine fuel supplier. This includes chartering dual-fuel LNG, LPG and methanol tankers, testing and using biofuels and supplying methanol to the maritime sector,” GCMD said.

Equinor is also piloting the use and supply of ammonia as a marine fuel, contributing to the development of associated safety, regulatory and bunkering arrangements.

Combining these perspectives can help address practical barriers to alternative fuels deployment while strengthening assurance across emerging marine fuel value chains.

Beyond alternative fuels, GCMD is working to accelerate the adoption of solutions that can reduce emissions from the existing fleet, including energy efficiency technologies (EETs) and onboard carbon capture and storage (OCCS).

GCMD’s work on EETs includes quantifying real-world fuel savings from technologies such as wind-assisted propulsion systems and developing financing mechanisms to scale their adoption. In OCCS, Project CAPTURED demonstrated an end-to-end value chain for onboard captured and liquefied CO₂, generating evidence that contributed to the recognition of captured CO2 under the EU ETS and in-principle support at the IMO for recognising carbon mineralisation as permanent storage.

Equinor brings decades of experience in offshore CO₂ storage, including its role in the development and operation of Northern Lights, the world’s first cross-border CO2 transport and storage facility, where liquefied CO₂ is transported by ship to an onshore receiving terminal before it is sent by pipeline for permanent geological storage beneath the North Sea.

Through the partnership, GCMD and Equinor will explore opportunities to combine their respective capabilities and experience to support the deployment and scaling of maritime decarbonisation solutions.

 

Photo credit: Global Centre for Maritime Decarbonisation
Published: 23 September, 2026

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Decarbonisation

Wah Kwong NatPower, AREL partner on maritime electrification in Hong Kong

Collaboration will examine opportunities to deploy shore power facilities, vessel charging infrastructure and battery energy storage solutions, alongside the development of electric vessels.

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Wah Kwong NatPower, AREL partner on maritime electrification in Hong Kong

Wah Kwong NatPower (WK NatPower) on Tuesday (22 September) said it has signed a Memorandum of Understanding (MoU) with Aberdeen Restaurant Enterprises Limited (AREL) to explore the electrification of piers, vessels and supporting energy infrastructure in the Aberdeen area of Hong Kong.

Against the backdrop of the HKSAR Government’s latest policy direction to advance green shipping, smart port development and shore power infrastructure, WK NatPower and AREL will explore the development of an integrated marine electrification ecosystem in the Aberdeen and Shum Wan areas. 

The collaboration will examine opportunities to deploy shore power facilities, vessel charging infrastructure and battery energy storage solutions, alongside the development of electric vessels for future transport and tourism services.

The initiative supports Hong Kong to become a leading hub for sustainable maritime innovation while contributing to the revitalisation of one of the city’s most iconic waterfront communities. As an initial phase of the collaboration, the two parties will explore the opportunity for the construction of a series of electric vessels and transport vessels. 

The initiative will also examine the potential deployment of the ApliAber® electric vessel fleet as a new benchmark for sustainable waterfront mobility and hospitality experiences in Hong Kong.

Vincent Ni, General Manager of WK NatPower, said: “This MoU marks an important step in supporting Hong Kong’s marine energy transition. Aberdeen has long been an iconic part of Hong Kong’s maritime heritage, and we are delighted to explore opportunities to develop integrated shore power and vessel electrification solutions that can support a cleaner and more sustainable future for the harbour.”

Wong Tai Yu, Director of AREL, said: “Through this collaboration, we look forward to exploring practical ways to introduce cleaner energy, electric vessels and sustainable waterfront experiences, while supporting the revitalization of Jumbo Kingdom® for future generations.”

 

Photo credit: Wah Kwong NatPower
Published: 23 September, 2026

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