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
.png?h=291&w=800&rev=-1&hash=805DEE6681CA9F3678BC5E88DD75A8F7)
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.
.png?h=447&w=750&rev=-1&hash=523587FB8AC1CF6FBF1C3B391D064F37)
.png?h=397&w=750&rev=-1&hash=300171F16039880C05D3A0D41F8B77AB)
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
Spotlight content
Related news
Singapore launches first voluntary SAF purchase trial
Singapore launches first voluntary SAF purchase trial
Singapore, 2 February (Argus) — Singapore's civil aviation authority, the Singapore Sustainable Aviation Fuel Company (SAFCo) and nine companies have launched the country's first trial for centrally procuring SAF on a voluntary basis. The system is set to be scaled up from October to meet the country's 1pc SAF target for the year. The nine companies are Google, the Boston Consulting Group, DBS and OCBC banks, Singapore state-owned investment firm Temasek, state-linked green investor GenZero, Changi Airport Group and air carriers Singapore Airlines and Scoot. The organisations will trial buying SAF and SAF environmental attributes (EAs) through SAFCo, according to an initial agreement signed at the third Changi Aviation Summit on 2 February. The signing was witnessed by Singapore's acting transport minister and senior minister of state for finance Jeffrey Siow. This trial will allow SAFCo to test the end-to-end operational, commercial and accounting processes needed for SAF procurement at a national level, the environment attributes (EAs) allocation system for companies' claims and reporting, and support the eventual implementation of Singapore's national SAF policy. SAFCo's role is to meet companies' differing needs and aggregate demand into an overall purchase, Civil Aviation Authority of Singapore (CAAS) director-general Han Kok Juan said. The first batch of SAF volumes will be purchased via a tender before 1 October. Details such as the tender's pricing structure and EA registry are still being worked out, and information on SAF volumes and origin will be shared when the tender is issued, Han said. "After the trial, the aviation ecosystem will be able to know how we operate, and be able to respond before 1 October, when we'll need to procure SAF in bigger batches," Han told reporters at a media briefing last week. Singapore's SAF levy on flights departing the country kicks in on 1 October, and the pooled funds will be used to purchase SAF to meet its 1pc target use this year. SAFCo will be taking delivery of Corsia-certified SAF which is already blended with fossil jet fuel, SAFCo chief executive Tan Seow Hui said. The nine companies involved in the trial will achieve credible emissions reduction, gain firsthand experience on SAF EA procurement and accounting processes to meet their sustainability commitments, and leverage SAFCo's aggregated demand to purchase SAF "cost-effectively, more efficiently and with greater certainty compared to individual procurement," CAAS said. "By aggregating demand and working closely with airlines, corporate partners and government agencies, we aim to demonstrate a practical and credible approach to SAF procurement and EA allocation that can scale over time," Tan said. By Sarah Giam Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Chevron to up Venezuelan crude at US refineries
Chevron to up Venezuelan crude at US refineries
Houston, 30 January (Argus) — Chevron is planning to run more Venezuelan crude in its US refineries, the company said today, following the shakeup of that country by US military intervention early this month. Chevron, which has been operating in Venezuela with state-owned PdV under a special waiver from US sanctions, has been running about 50,000 b/d of Venezuelan crude at its 356,500 b/d refinery in Pascagoula, Mississippi, chief executive Mike Wirth said on a fourth-quarter earnings call. Chevron can take another 100,000 b/d of Venezuelan crude into its system both at the Pascagoula facility and at the 285,000 b/d El Segundo refinery in southern California, where it has coking capacity, he said. Washington on Thursday lifted sanctions on Venezuela's oil exports, with caveats prohibiting sales to Cuba, business deals involving many Chinese companies and oil-for-debt arrangements. The lifting of sanctions will allow Venezuela's state-owned PdV to directly sell cargoes to any eligible buyer abroad. Previously, only trading firms Trafigura and Vitol were approved by the US government to market unsanctioned Venezuelan crude following the US capture of former Venezuelan president Nicolas Maduro on 3 January. US independent refiner Valero said on Thursday it plans to ramp up purchases of Venezuelan crude and expects it to be a major heavy feedstock this quarter. Valero ran as much as 240,000 b/d of Venezuelan heavy crude in the past before US sanctions, but that was prior to installing a new coker at its 380,000 b/d Port Arthur, Texas, refinery in 2023 which increased processing capacity for heavy crude. Now, Valero can run Venezuelan crude "substantially north of that number", Valero's vice president of crude and feedstocks supply and trading Randy Hawkins said this week. Phillips 66 said earlier this month that its two large Gulf Coast refineries can process about 200,000 b/d of Venezuelan oil if the crudes are available and the economics support it. The refineries include the 265,000 b/d Sweeny refinery in Old Ocean, Texas, and the 264,000 b/d refinery in Lake Charles, Louisiana. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
LNG share of alternative bunker fuel market grows
LNG share of alternative bunker fuel market grows
Sao Paulo, 30 January (Argus) — LNG is leading the charge in the alternative bunker fuel market as shipowners look to comply with greenhouse gas (GHG) emissions reduction regulations such as FuelEU Maritime, RED III, and EU ETS. Starting in 2025, shipowners traveling in to, out of and within EU territorial waters were required to cut greenhouse gas (GHG) emissions by 2pc, with steeper targets scheduled in the coming years. LNG is considered one of the most viable alternative marine fuels for shipowners seeking to comply with emission-reduction regulations in the short and medium term, according to market participants and recent bunker data. The prioritising of LNG as an alternative bunker fuel is justified by ample availability at ports worldwide compared with other alternative bunker fuels, traders said. LNG bunkering infrastructure is available at 222 ports globally , according to industry group SEA-LNG. In 2025, alternative-fuelled vessel orders dropped by 47pc on the year but LNG-fuelled vessels accounted for 69pc of the orderbook and for 31pc of total gross tonnage, according to Norwegian classification agency DNV. LNG bunker fuel sales more than doubled in Spain in 2025 from 2024 to above 8.1TWh, and quadrupled compared with 2023, according to the country's gas transport association Gasnam. LNG bunker loadings from terminals operated by Spanish grid operator Enagas also increased in 2025 . LNG sales for bunkering at the port of Antwerp doubled on the year in the third quarter of 2025. Going a step further Flexibility and fuel availability are key factors determining future vessel order books, market participants told Argus . In September, sales of FuelEU Maritime credit surplus to the requirements of LNG-fuelled vessel owners were at a significant premium to Argus' delivered bunker bio-LNG assessments in Europe. As a result, shipowners with surplus compliance were able to monetise these excess credits by selling them to under-compliant peers. Bio-LNG used in transportation also offers heavy GHG savings that could ensure shipowners comply with the planned International Maritime Organisation (IMO) GHG pricing mechanism . The regulation, if approved in a vote in October, would start in 2028 and requires ships to initially reduce their fuel intensity by a "base target" of 4pc in 2028 against 93.3g CO2e/MJ, the latter representing the average GHG fuel intensity value of international shipping in 2008. This gradually tightens to 30pc by 2035 and defines a "direct compliance target", that starts at 17pc in 2028 and rises to 43pc by 2035. Using LNG as a bunker fuel may help shipowners to comply with the base target until 2031, but not with the direct compliance target. Using bio-LNG, on the other hand, complies with all GHG emissions reduction targets and generates surplus FuelEU Maritime and IMO credits. By Natália Coelho Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Brazil market split on foreign biodiesel ban
Brazil market split on foreign biodiesel ban
Sao Paulo, 29 January (Argus) — A growing number of Brazilian fuel importers are arguing that ending a current ban on biodiesel imports could spur competition for the fuel. Since December 2023 only domestically produced biodiesel has been allowed for meeting Brazil's biofuel blending mandate. An cross-industry group led by the mines and energy ministry (MME) has been studying the role for imports, but the group has not yet made any recommendations. Even without the ban, imported biodiesel would not be profitable in Brazil, even from neighboring Argentina and Paraguay, which have ample production capacity. The Argus indicator for certified biodiesel in Argentina for the European market closed at $1,129/m³ on a fob Rosario basis on 28 January, while the price in Paraguay approached $1,177/m³ fob, according to information from domestic producers. Those imported prices remain above Brazilian domestic contracts in border regions. The weekly contract indicator for the Parana-Santa Catarina region was close to $1,030/m³, while reaching $1,010/m³ in Rio Grande do Sul state in the week ending 23 January. Prices in Araucaria, in Parana state, in the spot market reached $1,007/m³ on 28 January. But opening the tap to imports could increase the competitiveness of biodiesel in Brazil's domestic market, according to the association of fuel importers Abicom and energy industry chamber institute of oil and gas IBP. Even though foreign biodiesel does not have a competitive advantage over Brazilian product, an import ban implies the absence of a basis for challenging the prices charged by domestic producers, Abicom's chief executive Sergio Araujo said. Imports can also mitigate risks associated with the seasonality of feedstocks, production plant shutdowns, climatic events and logistical restrictions, according to Araujo. But producers are against the measure lifting the import ban, arguing that it could discourage new investments in the industry, compromise the sector's predictability and create unequal competitive conditions. Biodiesel imports also do not guarantee product quality, a widely discussed issue in the domestic market, said Jeronimo Goergen, president of biofuel producers association Aprobio. Authorizing biodiesel imports could also increase domestic production facilities' downtime, the producers argue. Brazil produced 8.9mn m³ (168,378 b/d) of biodiesel in January-November 2025, according to data from hydrocarbons regulator ANP, and 2026 consumption is expected to reach 10.49mn m³, according to state-owned energy research company EPE — both well below the country's production capacity of almost 16mn m³. Producers also worry that biodiesel imports may increase the amount of fraud in the blending market. Reports of diesel failing to meet specifications for biodiesel content rose by almost 34pc in 2025 from the previous year to 292, according to preliminary data from the ANP. Both Argentina and Paraguay have excess biodiesel production capacity. Argentina has installed biodiesel production capacity of 3.9mn m³/yr, but utilization rates reached only 13pc in the first half of 2025, according to the Rosario stock exchange. Installed capacity is almost 252,000 m³/yr in Paraguay, where utilization rates reached 35pc in 2024, according to the center for economic studies of the industrial union of Paraguay. Data for 2025 has not been released. The MME has not provided a timeline for the review it is leading on the imports issue. By Natalia Dalle Cort Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.