With global chatter circling around the latest mass scale respiratory ailment, the coronavirus, there is global glut of petroleum fuels. Like SARS, in 2003, the coronavirus is thought to spread through respiratory droplets being transmitted form one person to another (i.e., sneeze or cough). With the potential for person to person transmission being so high, major travel has been hindered by the fear of either spreading or acquiring the new virus. With more than 17,000 cases already and growing, there is now concerns on how to handle the temporary glut of fuels in the market.
January 1, 2020, marked a big change for marine vessels. The IMO (International Maritime Organization) has implemented a significant reduction in the sulfur content for the shipping industry in 2020. The reduction brings the previous 3.5% sulfur content (bunker fuel), plummeting down to the new 0.5% sulfur requirement. Goldman Sachs estimates the monetary impact could be as much as $240 billion during the 2020 calendar year.
The OPEC meeting that concluded today in Vienna ended with ministers approving productions cuts for the first quarter of 2020. The cuts for OPEC+ will be increased from 1.2 million bpd to 1.7 million bpd. A 500,000 bpd cut should be painless for the organization as they are currently at over-compliance with the cuts as a group. Saudi Arabia has been carrying a large portion of the cuts to compensate for the group’s non-compliant members including Iraq, Russia and Nigeria. The group is now tasked with divvying up the cuts and enforcing the members compliance with the cuts.