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IMO 2020 effect disrupts fuel oil contract renewals

A traded market trying to price in uncertain IMO 2020 implications is wreaking havoc with term contract negotiations

Fuel oil is nine months away from a drastic fall in global demand due to tighter emissions standards in the shipping sector. As a result, annual fuel oil contracts worth billions of dollars that have largely peacefully rolled over for years are this year becoming the subject of frantic renegotiations, forcing even the most risk-averse companies to, in effect, take large bets on the future. The UN's International Maritime Organisation (IMO) is cracking down on the sulphur content of marine fuels. From 1 January 2020, the new ceiling is 0.5pc sulphur content, down from 3.5pc currently. This prevents much high sulphur fuel oil (HSFO), which averages over 2pc sulphur globally, from being used i



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