HOUSTON, Jan. 15 (Xinhua) -- New regulations for changes in marine fuel sulfur limits will put upward pressure on diesel margins, the U.S. Energy Information Administration (EIA) said on Tuesday.
Beginning on Jan.1, 2020, new regulations from the International Maritime Organization (IMO) will lower the maximum sulfur content of marine fuel oil used in ocean-going vessels from 3.5 percent to 0.5 percent.
The change in fuel specification is expected to put upward pressure on diesel margins and crude oil prices in late 2019 and early 2020, said EIA.
The administration forecast that one of the most significant impacts from the regulations will be on diesel wholesale margins, which will increase from an average of 0.43 U.S. dollar per gallon (about 3.8 litters) in 2018 to 0.48 dollar per gallon in 2019 and then to 0.65 dollar per gallon in 2020.
EIA expected that starting in the fourth quarter of 2019, the regulations will drive global refiners to increase refinery runs and maximize upgrading of high-sulfur heavy fuel oil into low-sulfur distillate fuel. Total U.S. refinery runs are expected to increase by 4 percent from 2019 to reach a record level of 17.9 million barrels per day on average in 2020.
EIA's analysis also indicated that the price effects that result from implementing this new standard will be most acute in 2020 and will diminish over time.
