Shifting incentives bring uncertainty, limit liquidity in spot California R99 markets
Summer has brought record low R99 cash prices — and nearly 3.2mn bl of vessel-supplied renewable diesel — to key California distribution hubs, but those seeking to take long-term supply positions must grapple with changing incentive programs and yet unseen consequences for supply flows.
Looking ahead to the end of 2024, the future of RD supply is murky. Changing credit eligibility could discourage the volume of imports the west coast has grown accustomed to, domestic refining margins at the US Gulf coast have been indicated on the decline for much of the year, and a volatile underlying CARB diesel basis increases participants’ exposure to price risk.
Cash prices for R99 at the head of the pipeline (hop) in Los Angeles hit their lowest level in Argus series history on 6 August, when a downturn in the underlying CARB diesel basis pressured values to just $2.35/USG. The price slide, coupled with anecdotally unworkable spreads to local rack prices, weighed heavily on activity this summer, despite a steady stream of offshore shipments.
Deliveries via vessel to northern California in August were the second highest in Argus history at an estimated 741,000 bl — the latest in steady monthly increases since June — per data aggregated from bills of lading and global trade and analytics platform Kpler. Jones Act vessels from the US Gulf coast alone accounted for 448,000 bl, while shipments ex-Singapore constituted the remaining volume.
Southern California received an estimated 847,000 bl, almost evenly split between offshore suppliers and those at the US Gulf coast.
But the future of renewable diesel supply flows into California is mired with uncertainty surrounding incentives for both importers and domestic refiners. The BTC is set to expire with the 2024 calendar year, giving way to the IRA’s Clean Fuel Production Credit. The change would heavily favor US-based renewable diesel production and reduce awards for high-volume offshore imports to the US west coast, the latest pivot for an adolescent market that has struggled to achieve supply equilibrium.
Waterborne renewable diesel deliveries to California ports
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Neste — the leading offshore supplier of US R99 — is also slated to undergo turnarounds at both its Rotterdam, Netherlands, and Singapore facilities this quarter, followed by a second short-term Singapore turnaround in the fourth quarter. But the import lineup so far does not reflect a disruption in deliveries to the US this quarter.
At home, refining margins at the US Gulf coast are indicated on the upswing after narrowing through early August.
Renewable diesel deliveries to the west coast by rail from other US regions reached a record-high of nearly 2mn bl in May, per data from the Energy Information Administration (EIA). Shipments by vessel are also trending higher, with an estimated 864,000 bl delivered to California in August — the highest since November.
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Spot R99 markets in California were little tested at the end of August, although both the Los Angeles and San Francisco markets drew support from a controversial surprise proposal to limit California Low Carbon Fuel Standard credit generation for renewable diesel made from soybean or canola oils. The California Air Resources Board will also consider a one-time tightening of annual carbon reduction targets for gasoline and diesel by 9pc in 2025, compared with the usual 1.25pc annual reduction and a 5pc stepdown first proposed in December 2023, per a 12 August release.
But an unsteady economic landscape for domestic production remains a key decision-driver among US refiners.
Vertex Energy will begin reversing a renewable fuels hydrocracking unit back to conventional fuel feedstocks this quarter at its 88,000 b/d Mobile, Alabama, refinery. The company at the time cited headwinds in the renewable fuels market that it expects to persist through 2025.
Author: Jasmine Davis, Editor, Associate Editor – Oil Products
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Viewpoint: West Africa refineries key to hub status
Viewpoint: West Africa refineries key to hub status
London, 15 December (Argus) — West Africa is developing into a regional refining and trading hub, backed by state aims to achieve greater refined product self-sufficiency and export capacity. The extent of further change in 2026 will be defined by the fortunes of existing and fledgling refining projects, including Nigeria's 650,000 b/d Dangote and a clutch of smaller plants. The independently-owned Dangote refinery continues to upend regional and global refined product markets, reducing west Africa's reliance on imports. Since gasoline production began at the refinery in September 2024 , Nigeria — the region's largest gasoline importer — has seen net gasoline imports steadily fall to a historic low of 40,000 b/d in September this year, from 332,000 b/d just a year earlier, Kpler data show. Meanwhile, Nigeria's net middle distillate exports hit a record 145,000 b/d in July, up from 82,000 b/d on the year, and the country has broadly been a net exporter of these products since May 2024. As a result, Nigeria and west Africa as a whole are pulling on considerably less gasoline and middle distillates such as gasoil and jet fuel. Year-to-date, the region — spanning Mauritania to Angola — has seen gasoline imports drop by a quarter on the year to 337,000 b/d, while jet imports have collapsed to 4,000 b/d, both the lowest since at least 2016 when Kpler records began. West African gasoil imports have fallen to a five-year low of 162,000 b/d. Dangote has inarguably transformed regional oil product market dynamics, having proven robust through multiple bouts of maintenance works, and there is room for it to capture more of the domestic gasoline market in the year ahead. The same cannot be said for Nigerian state-owned NNPC's refining assets. The company restarted a 60,000 b/d section of the 210,000 b/d Port Harcourt refinery late in 2024 only to shut it again in May this year, while the 125,000 b/d Warri plant restarted in December 2024 before going offline the following month. This underscores the challenges of modernising or rehabilitating long-mothballed facilities along the west African coast. Refiners in other west African countries are expanding their offerings to regional consumers, further eroding market share previously claimed by European traders. Angola's 30,000 b/d Cabinda refinery is up and running , producing mainly gasoil and jet fuel for the domestic market from its first phase. This is likely to curb Angolan middle distillate import demand, with the refinery — a 90:10 joint venture between UK-based Gemcorp and state-owned Sonangol — meeting 10pc of domestic demand. Cabinda's second phase will add gasoline production, but not until around 2028. Angola imported 20,000 b/d of gasoline in January-August, according to Kpler, around 40,000 b/d of diesel and gasoil, and negligible amounts of jet fuel. In Ghana, the 45,000 b/d Tema Oil Refinery (TOR) continues works to restore nameplate capacity. The privately-owned 120,000 b/d Sentuo Oil Refinery and the country's smaller Platon and Akwaaba modular refineries operate sporadically. TOR's return may be a surprise for 2026, with the operator reporting in October that turnaround activities were taking place "aimed at preparing the refinery for a safe and efficient restart". The refinery's prospects look stronger than those of Ghana's Petroleum Hub Development Corporation (PDHC), which appears to have postponed construction of the first of three planned 300,000 b/d refineries since John Mahama returned to power in January for a non-consecutive second term. The PDHC delays highlight the long lead times typical for large-scale refining projects. Dangote itself took nearly a decade to move from its first loan agreement to eventual start-up. Other projects announced this year are unlikely to advance in 2026, making operating or near-complete refineries in Nigeria, Angola and Ghana critical for the region's push towards a bigger role in the downstream market. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Viewpoint: Indonesian waste oil supply to fall in 2026
Viewpoint: Indonesian waste oil supply to fall in 2026
Singapore, 15 December (Argus) — Indonesia's implementation of a 50pc biodiesel (B50) blend mandate and ongoing palm plantation seizures may raise palm oil prices and reduce global waste oil supply, likely keeping palm oil mill effluent (Pome) oil prices supported in 2026. The country raised its biodiesel blend target by 5pc to 40pc starting from February 2025 and is targeting another 10pc increase to 50pc by the second half of 2026 . The higher blending mandate would lower total palm oil exports by about 11-12pc in 2026 compared with 2024 and 2025, Indonesian agriculture ministry official Baginda Siagan said at the 21st Indonesian palm oil conference (IPOC2025) in November. This would likely support an increase in crude palm oil (CPO) prices, industry analysts said. Prices of CPO and palm-based waste oil like Pome oil are linked because market participants historically priced Pome oil at a set discount to CPO values, and they are both feedstocks for biofuel production. But waste oil export values have mostly been at a premium to CPO this year due to Indonesia's move to suspend exports of unprocessed Pome oil and used cooking oil (UCO) since 8 January , tightening the global supply of waste oils. Indonesia has yet to resume issuing export permits. The restrictions have since driven exporters to explore refining Pome oil for exports. Refined Pome oil exports totalled 440,000t in January-November, according to Kpler data. No refined Pome oil was shipped in 2024 prior to the export pause because exporters directly shipped unrefined material. Refined Pome oil has lower metals and impurities than unprocessed material and can be used for hydrotreating to produce hydrotreated vegetable oil or hydroprocessed esters and fatty acids synthetic paraffinic kerosene (HEFA-SPK) with less processing than crude Pome oil. Argus launched the refined Pome oil fob Indonesia assessment on 15 October to reflect the value in this emerging export market, and it has since been priced above rival regional biofuels feedstock assessments. Indonesia's export pause was a key factor driving up waste oil prices in the region to three-year highs in September ( see chart ). The duration of Indonesia's ban on crude Pome oil and UCO exports remains uncertain, but the government may be tempted to maintain restrictions to keep more feedstocks available to expand domestic biofuels production. This would continue to limit seaborne supply and support prices on a fob basis. Speaking at IPOC2025, Indonesia's palm plantation fund (BPDP) head suggested exploring alternative waste feedstocks such as UCO for use in the B50 programme to reduce Indonesia's reliance on CPO as biodiesel feedstock. State-owned Pertamina is already trialling sustainable aviation fuel (SAF) production through co-processing UCO at its Cilacap refinery since the second quarter of 2025, and shipped about 32,000 litres of UCO-based HEFA-SPK in its first shipment in August . The country is targeting the production of 1mn kilolitres/yr SAF by 2030 . Plantation seizures may squeeze CPO output Palm oil production in Indonesia may be squeezed by the government's ongoing efforts to reclaim plantation lands it said were illegally acquired this year. The Indonesian government in January formed a forestry task force for this purpose and reclaimed over 3.3mn hectares of plantation land by August, according to its website. The land will be transferred to and managed by state-owned Agrinas Palma Nusantara, which was set up in February to oversee the confiscated land. Agrinas has been recruiting staff to operate its plantation business but the availability of harvesters still poses a challenge, it said in a press release on 1 December. Many in the sector expect the change in land management to reduce plantation efficiency starting in 2026. But the extent of yield and production losses caused by the land seizures remains uncertain, said industry analyst Thomas Mielke at IPOC2025. He estimated palm oil output in the country may decline to 49mn t in 2026 from 49.4mn t in 2025. Ministry officials at IPOC2025 did not comment on the ongoing palm plantation seizures. The collection and export of Pome oil from mills may also fall on the back of fewer fresh fruit bunches harvested from oil palm plantations due to the land seizures. Less CPO available for processing into palm olein for domestic cooking oil could also cause UCO supply to shrink. Traceability concerns continue to threaten demand Meanwhile, concerns surrounding Pome oil traceability have continued among European buyers this year, prompting some EU Member States including Portugal , Germany and Ireland to disincentivise Pome oil usage in their biofuels mandates. Most recently in October, the Dutch emissions authority (NEa) said that it will investigate the international Pome oil supply chain with a focus on "fraud risk", and that any findings could be used in policy recommendations. European Pome oil demand is currently expected to remain stable in the near-term at around 1.9mn t/yr, according to Argus Analytics, but removal of policy support by more markets in the new year could tip the balance. Higher demand for Annex IX Part A feedstocks under the RED III may drive other EU countries to absorb Pome oil volumes diverted from markets that have chosen to disincentivise the feedstock by removing it from the classification. By Malcolm Goh Asian waste oil prices ($/t) Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Viewpoint: Saudi condensate to lead supply rise in 2026
Viewpoint: Saudi condensate to lead supply rise in 2026
Singapore, 15 December (Argus) — The Asian condensate market is bracing for the introduction of a new grade from Saudi Arabia in 2026, which may cause significant pricing disruptions if demand cannot keep pace with the rise in supplies. Condensate loadings from state-controlled Saudi Aramco's new Jafurah natural gas project should start in the first quarter of 2026 , in cargo sizes of 500,000 bl, traders said. Some expect 3-4 spot cargoes a month to be made available. Jafurah condensate, with an API gravity of 49.75° and sulphur content of 0.16pc, appears to be similar in quality to Australian Ichthys and Qatari condensates, which are rich in naphtha and middle distillates. It may also compete with lighter crudes like US light sweet WTL. Jafurah's ramp-up speed will be a critical factor for 2026, and some traders think condensate prices will have to be gradually adjusted lower when the new supply comes. Buyers may initially be hesitant to commit to Jafurah condensate given its quality is untested, so its impact on similar-quality grades may not be immediate. The bulk of condensate produced in Asia-Pacific and the Mideast Gulf goes to the UAE, South Korea, Singapore and China, mostly to splitters. Any potential price decline next year resulting from more supply may be capped by expectations of condensate offers from Qatar's North Field East (NFE) expansion project emerging only towards the end of 2026, with its effects not anticipated to be felt until 2027. This is perhaps a strategic move aimed at preventing a flood of supply in 2026 that would drive down prices even more, a Singapore trader said. The project is supposed to start up in mid-2026 . State-owned QatarEnergy (QE) has, in the meantime, struck several long-term supply deals with the UAE's Enoc , Japan's Mitsui and a Singapore unit of Shell . "[They have] covered some of their [supply] lengths already, but [there is] still a lot more," a trader said. QE typically sells its Qatari Low Sulphur Condensate (LSC) and Deodorized Field Condensate (DFC) — also produced at the North Field — via regular tenders, and traders expect condensate from the expansion project to be of similar quality to these. Qatar is the world's third-largest condensate producer, behind Russia and the US, according to IEA figures, and QE's LSC and DFC account for a quarter of the world's internationally traded condensate. These volumes were nearly 850,000 b/d last year, data from oil analytics firm Vortexa show. Australia is also a major condensate supplier, shipping about 180,000 b/d last year, mainly to Asian buyers. Demand outlets One potential source of demand for these new condensates is China, given its need for naphtha as a feedstock for its expanded petrochemical capacities, while middle distillates produced from splitting the condensates can be sold off, traders said. Recent US sanctions on Russia — a major global exporter of naphtha — have made buyers, including China, reluctant to take Russian naphtha . China imported around 77,000 b/d of condensate last year, Vortexa data show. Iranian sour South Pars condensate accounted for close to 50pc of that, which was probably discounted because of Iranian sanctions, so any replacement supplies would have to be priced competitively for China to consider switching. Singapore's 70,000 b/d Bukom splitter could be another source of condensate demand once it is properly up and running , traders said, adding to the 237,000 b/d Bukom refinery's purchases of grades like Qatari condensate. Refiners often view heavy condensates as an alternative to ultra-light crude feedstock and could turn to such supplies if they are priced at a level that makes sense for them economically compared to regular crude grades. In the past, firm prices for light sour crudes like Abu Dhabi Murban had prompted some refiners to turn to Qatari condensates. Otherwise, Aramco especially may be banking on replacement demand from buyers in South Korea, the UAE and Singapore, hoping to switch some of their purchases away from Qatari and Ichthys condensates, as well as lighter crudes, traders said. If there is insufficient demand for the additional supplies, some condensates can even be blended with crude to create lighter grades of crude, a Singapore trader said, optimistic that the market will somehow find a way to absorb these extra supplies over the next few years. By Reena Nathan Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
IEA ups global crude runs forecast, driven by OECD
IEA ups global crude runs forecast, driven by OECD
London, 11 December (Argus) — The IEA has increased its forecast for global refinery runs for 2026, driven by a rise in OECD runs in response to strong refining economics, continuing loss of Russian supply of products and a growing global crude oil surplus. In its latest Oil Market Report (OMR), the agency increased its forecast for global crude runs in 2026 by 250,000 b/d to 84.4mn b/d. The IEA predicts crude runs in the OECD of 36.2mn b/d next year, up from 35.6mn b/d in its previous OMR. That increase means the organisation forecasts that OECD runs will drop by only 110,000 b/d on the year in 2026, despite an overall 860,000 b/d drop in OECD refining capacity in 2025-26. Strong refining margins particularly boosted European throughput in October, and the IEA expects that to continue into next year. Refinery profitability has reached the highest in recent weeks since the start of the conflict in Ukraine, caused by strong rises in crude supply and unexpected tightness in product markets, especially in middle distillates and gasoline. European throughput will reach 95pc of capacity next year, the IEA said. The IEA nudged up forecast runs in OECD Americas by 180,000 b/d to 19.2mn b/d. Higher refining margins should boost US throughput in the first half of next year, with further support found from increasing reliability in Mexican refineries. The IEA forecasts non-OECD runs at 48.2mn b/d, down from 48.5mn b/d in its previous report. Delays to the start-up of refineries in India, Iran and Angola — as well as ongoing works at KPC's al Zour refinery in Kuwait — weighed on forecast throughput. The body trimmed its forecast for Chinese runs in 2026, but said higher floating inventories of cheaper Russian and Iranian crude in Asia could cause Chinese runs and exports to rise next year. Predicted Eurasian runs held steady at 6.1mn b/d despite throughput falling to a three-year low in October. Preliminary reports suggest Russian runs recovered in November, the IEA said. Diesel supplies by pipeline for export from Russian ports could rise by 20pc on the month to 2.1mn t in December, traders said. Sanctions could provide further support to margins in 2026, the IEA said. That includes US sanctions on Russian and Iranian exports, as well as EU sanctions on products derived from Russian crude. By Josh Michalowski Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.