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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European diesel cracks at record as Med supply tightens
European diesel cracks at record as Med supply tightens
London, 31 July (Argus) — Diesel crack spreads reached new records across Europe this week, topping $90/bl on 29 July, with supply tightness most prevalent in the Mediterranean region, where prices are at the highest premium to northwest Europe in three months. Diesel cargoes loading from the Amsterdam-Rotterdam-Antwerp (ARA) hub settled at a $85.86/bl premium to benchmark North Sea Dated crude on Thursday, 30 July, up by 16pc on the week. Cracks exceeded the most recent all-time high set earlier in July and have risen by more than 50pc since the start of the month. The effects of the strait of Hormuz closure and of Russia's diesel export ban, which was extended on Thursday , have been particularly felt in the Mediterranean. Turkey is normally the largest buyer of Russian diesel, but flipped to a net-importer from European countries for the first time since November 2022 this month. Diesel cargoes delivered into the west Mediterranean settled at a $91.67/bl premium to Dated on Thursday, the second highest on Argus' records after Wednesday's peak of almost $95/bl. Competition between the Mediterranean and northwest Europe for non-European supply has surged in recent days, according to market participants. The premium for diesel cargoes delivered to the west Mediterranean against cargoes delivered to ARA settled at a three-month high of $33.50/t on Thursday. Only in April this year has that been higher since May 2022. Disruption to shipping in the Red Sea caused by attacks from the Yemen-based Houthi group this week — including on Saudi state-controlled Aramco facilities in Jizan and Yanbu — could place further strain on European supply, again with the effects felt more in the Mediterranean, traders said. Mediterranean EU countries have relied on Saudi Red Sea ports for 24pc of their diesel imports since April, while northwest European EU countries have only relied on the region for 17pc of their imports. Only 100,000t of diesel has loaded from Saudi Red Sea ports since 27 July, down from almost 600,000t in the previous week, and no tankers have loaded diesel from Jizan, according to Vortexa. Competition continues to rise Buyers in the eastern Mediterranean and the Black Sea are out-competing those in northwest Europe for alternative supply, pulling in "huge volumes", market participants said. Turkish imports of non-Russian diesel are on track to be above 600,000t in July, which would be the highest since December 2022. This includes a Suezmax cargo from Indian refiner Reliance's 1.4mn b/d Jamnagar plant, according to Vortexa. Greece's imports have risen to a seven-month high so far in July. In the Black Sea, Romania has leaned heavily on Saudi Arabian Red Sea supply, importing more than 175,000t in July on two Long Range 2 (LR2) tankers, one each from Yanbu and Jizan. This brought the country's net imports to an eight-month high. Seaborne arrivals into Ukraine have also reached an eight-month high. Flows from northwest Europe to the Mediterranean have not picked up despite the favourable price spread. Almost 400,000t has loaded on that route so far in July, matching the average of the prior three months. Lower export availability in the Mediterranean may have discouraged the trade, as tankers could have to return empty, a trader said. US supply patterns have also shifted. More than half of US Gulf Coast supply that has discharged in Europe so far in July did so in the Mediterranean, compared with just 13pc in all of 2025. A record amount of diesel loaded from the US for Europe in the week to 26 July , and loadings have continued at a fast pace this week. But that is not enough to outweigh the present constraints, market participants said. Independently-held stocks at ARA fell to the third-lowest on consultancy Insights Global's records this week. Lower barge flows from ARA, because of the diminished Rhine River water levels, could have the effect of increasing German demand for cargoes to its Baltic Sea ports, a trader said. The backwardated structure in Ice gasoil futures — indicative of prompt supply tightness — was the widest in three months on Thursday. By Josh Michalowski Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Saudi Arabia unveils maritime defence alliance
Saudi Arabia unveils maritime defence alliance
Singapore, 31 July (Argus) — Saudi Arabia on 30 July announced the formation of a maritime defence alliance with 13 other countries, to address shared maritime threats and protect navigation through the Bab el-Mandeb strait, the Red Sea and Gulf of Aden. Saudi Arabia hosted a meeting on 30 July with representatives from 43 countries, out of which 14 issued a joint statement affirming their support for the Multinational Maritime Defense Alliance project, according Saudi Arabia's ministry of defence. The alliance is a defence initiative seeking to strengthen collective maritime security, protect international sea lanes, preserve freedom of navigation and global trade, and share responsibility in confronting common threats. The 14 countries include Saudi Arabia, Kuwait, Bahrain, Qatar, Pakistan, Turkey, Egypt, Jordan, Yemen, Bangladesh, Nigeria, Sudan, Djibouti and Somalia. Participants at the meeting discussed the growing threats targeting maritime security, including attacks on vessels, energy tankers and maritime infrastructure, as well as the risks these pose to the safety of maritime navigation, global supply chain stability, and the international economy. Participants emphasised the importance of strengthening multilateral defence co-operation to deal with these threats and maintain the security of international sea lanes. The meeting also addressed the founding arrangements for the alliance, with Saudi Arabia set to serve as its founding and leading state and host its headquarters. Military planners from countries intending to join the alliance will work to complete founding procedures including finalising the charter and its reference documents, completing the organisational structure, command and control arrangements, operational mechanisms and forming the necessary frameworks and teams. Diversions and delays The Iran-backed Yemeni Houthi militant group announced a ban on Saudi Arabian maritime navigation on 20 July. The group has claimed attacks on Saudi-linked shipping and infrastructure since then, including on Saudi state-controlled Aramco facilities in Jizan and Yanbu, with satellite images suggesting fires at Jizan. Crude tanker movements have been disrupted as a result, especially for Saudi Arabia's exports from the Red Sea. Some tankers have abandoned planned transits through the mouth of the Red Sea and have instead turned north toward the Suez Canal, potentially adding around a month to the voyage along with higher freight costs if destined for Asian or east African markets. Tanker markets have so far viewed the announcement of the alliance as a positive development, but any immediate impact on freight rates is expected to be limited. A lasting improvement in shipping conditions would more likely stem from de-escalation efforts rather than from additional military deployments, market participants said. Until there is clear evidence of reduced regional tensions and a sustained improvement in security conditions, shipowners are likely to remain cautious and avoid transits through the region. The coalition should support sentiment, but owners would place far greater weight on any indication from the Houthis themselves that they are committed to de-escalation, a shipbroker said. Additional naval protection helps, but the missiles will still be flying, they added. For now, war-risk premiums, insurance costs and transit assessments are unlikely to change materially on the back of an announcement alone, another market participant said. By Prethika Nair and Sean Lui Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Mexico economy tops forecasts with 2.2pc 2Q growth
Mexico economy tops forecasts with 2.2pc 2Q growth
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Spain waste ethanol demand to rise on tight supply
Spain waste ethanol demand to rise on tight supply
London, 30 July (Argus) — Spain's newly adopted transposition of the EU's renewable energy directive (RED III) will raise demand for ethanol, especially advanced ethanol. But the legislation will constrict ethanol imports, thus tightening overall ethanol supply. The increased biofuels mandates under Spain's REDIII will support ethanol demand once implemented, in 2027 at the earliest. But demand for advanced ethanol, made from waste-based feedstocks listed in Annex 9a of the EU's renewable energy directive, is also markedly set to grow in Spain as of 2027, thanks to a new advanced bioalcohol sub-obligation under the implementation of REDIII. The mandate will start at 0.1pc of gasoline consumption in 2027 and rise to 5pc by 2040. This is a unique sub-mandate to Spain, as most EU member states do not have exclusive waste-based gasoline targets. France and Italy, for example, have bioethanol sub-targets, but none specifically for waste-based ethanol. In other EU countries, like Germany and the Netherlands, there are sub-quotas for waste-based, or advanced, biofuels, not limited to ethanol. According to Spain's Strategic reserves agency, Cores, the country consumed just over 7mn t of gasoline in 2025. Based on this figure, the new sub-mandate could generate an initial demand of approximately 7,000t of advanced ethanol or biomethanol in 2027, rising to over 350,000t in 2040. The total ethanol production of the four operational plants in Spain amounts to 647,065t/yr, according to Argus data. Only one of these units makes second generation, waste-based, ethanol, from grape marcs and wine lees, and has a nameplate capacity of 258,293t/yr. Notably, Spanish producers do not solely supply their domestic market. Eurostat data shows that Spain exported 441,055t of ethanol in 2025, with an almost 47pc (206,808t) share being supplied to France and just over 24.5pc (108,292t) going to Greece. Arbitrage opportunities for suppliers exporting to Spain look to fall from 2027. This is because Spain's RED III framework legislates that only undenatured ethanol is eligible for compliance under the renewable transport fuel targets, opposed to denatured ethanol which contains additives making it unfit for human consumption. Spain imported 308,096t of ethanol in 2025, according to Eurostat data, with just over 61pc, or 189,027t of this being denatured product. The US was Spain's largest supplier at 141,579t, all of which was denatured ethanol. The change in legislation means that imported ethanol will all be subject to the maximum import duty of €192/m³ for undenatured product, compared with a lower €102/m³ duty for denatured ethanol. The Netherlands made the same change in its RED III draft in October. Germany and France also already exclude denatured ethanol imports from their national transport mandates. This transition to undenatured ethanol, aligning with the policy of other key EU countries, may reduce opportunities for arbitrage with the EU . This is because it would thereby prevent some exporters, like the US, from sending denatured cargoes to profit from lower tariffs, and make those cargoes that have been sent more expensive after clearing customs. By Toby Shay Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.