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MGO tight in the Med two months after ECA starts

  • Market: Oil products
  • 10/07/25

As orders for marine gasoil (MGO) pick up in the Mediterranean because of new sulphur emission limits, the region has faced sudden supply shortfalls. Strength in wider distillate markets could reduce stocks even further.

The International Maritime Organisation's (IMO) new sulphur limits in the Mediterranean have significantly increased MGO demand since being implemented on 1 May. An eastern Mediterranean trader said before the region became an emissions control area (ECA) he had been asking local refineries for deliveries of 5,000-10,000t per month, but now it's around 30,000t. ECA rules cap sulphur limits for vessels transiting the sea at 0.1pc, down from the previous limit of 0.5pc. Consequently, many vessels have switched from bunkering very-low sulphur fuel oil (VLSFO), with a standardised sulphur level of 0.5pc, to bunkering MGO, a 0.1pc sulphur marine fuel.

Against sudden increases in demand, supply levels have failed to keep up, and MGO refining differentials have gained robust support as a result. Barges of MGO loading in northwest Europe have strengthened their price premium to front-month Ice Brent crude after hitting their narrowest 2025 premium in mid-March of $15/bl. Differentials widened to $33/bl by 19 June, a 16-month high, partly because Mediterranean marine fuels suppliers have not been receiving sufficient supply from refineries across Europe. These plants could be reconfiguring desired product yields in response to fresh demand fundamentals. The latest Eurostat data shows that in April Malta — a key Mediterranean bunkering hub — received 77,000t of gasoil and diesel oil, its highest imports since August 2020, probably in readiness for the ECA. Price spreads for middle distillates between northwest Europe and the Mediterranean also point towards a supply imbalance within the continent. This week, fob west Mediterranean French-specification heating oil, which can be used as a blending component for MGO production, was $14/t higher than the same product loading in northwest Europe, its widest spread since January 2023.

Overall product supply cuts in the rest of Europe are also likely to support prices for marine gasoil in the continent. ExxonMobil announced last week that units in its low-sulphur diesel facility will soon come online at its 270,000 b/d Fawley refinery in the coming days. The facility could boost low-sulphur diesel production by 40pc, to the detriment of higher sulphur distillate output. Ship tracking platform Vortexa estimates that roughly half of the MGO to have arrived in the Mediterranean since 2016 departed from Fawley. But this year none has arrived from the plant, compared with the 125,000t in the first half of 2024.

European distillate markets more broadly are also experiencing robust support because of increasingly tight regional supply. Prax, the owners of the UK's 107,500 b/d Lindsey refinery, entered insolvency proceedings in late June, with the future of the plant currently uncertain, potentially further cutting European distillate output. Backwardation spreads in the Ice gasoil futures market recently reached a 16-month high, indicating the market expects middle distillates to remain undersupplied in the near-term. This has meant lower-sulphur diesel, a road fuel, should be comparatively even more in demand from refineries than MGO. On 8 July, for example, 10ppm sulphur German diesel was pricing at more than $90/t above MGO, its strongest premium since November 2022. So, refiners will be looking to produce lower sulphur road fuels rather than MGO despite the current shortfall in the Mediterranean.

By Bob Wigin

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15/12/25

EU to dilute Ice vehicle phase out: German lawmaker

EU to dilute Ice vehicle phase out: German lawmaker

Brussels, 15 December (Argus) — The European Commission is likely this week to dilute its plan to phase out sales of new internal combustion engine (Ice) vehicles by 2035, according to a lawmaker. "The ban on internal combustion engines is history," said Manfred Weber, the chair of parliament's largest centre-right group EPP. He said the commission will present on 16 December an automotive package that "will revise the CO2 standards for cars, reversing the disastrous ban on internal combustion engines". Weber is a member of Germany's CDU/CSU party, as is commission president Ursula von der Leyen. German chancellor Friedrich Merz has called on the EU to allow the sale of vehicles with highly efficient combustion engines, plug-in hybrids and range-extender EVs beyond 2035. This had faced pushback, with more than 150 European e-mobility firms requesting the commission "stand firm" on its 2035 target. An EU official said the target is now likely to be for a 90pc GHG reduction from 2035 for new vehicles. "As it stands the targets for 2030, but also 2035, are not realistic," said Sigrid de Vries, director general of the European Automobile Manufacturers' Association (ACEA). "Even with a 90pc target [for reducing GHG by 2035], make no mistake, that will be very, very challenging." The European motor industry has already flagged the possibility of huge fines for manufacturers should they fail to meet existing emissions targets, which are for a 15pc reduction by 2029 compared with a 2021 baseline, and a 55pc reduction from the same baseline in 2030-34. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Viewpoint: West Africa refineries key to hub status

15/12/25
News
15/12/25

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.

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Viewpoint: Saudi condensate to lead supply rise in 2026

15/12/25
News
15/12/25

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.

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IEA ups global crude runs forecast, driven by OECD

11/12/25
News
11/12/25

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.

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Commodity rail shippers push for more train data

11/12/25
News
11/12/25

Commodity rail shippers push for more train data

Houston, 11 December (Argus) — Industrial shippers of commodities like grain and petrochemicals want federal regulators to widen the scope of proposed rules that would require Class I railroads to report more data on their on-time service performance. US rail regulator the Surface Transportation Board (STB) in September put the industry on notice that it intends to issue rules to require that each of the six biggest railroads, including Union Pacific and Norfolk Southern, report two new categories of performance data to the agency. The first would benchmark railroads' shipments against their original estimated time of arrival (OETA) and the second would measure "industry spot and pull" data, or ISP, to determine whether shipments are picked up and delivered within their planned service window. The board action aims to address rail shippers' long-running concerns that unpredictable rail service is a wild card in their supply chains, as many shippers rely nearly completely on rail to get their goods to market. The American Fuel and Petrochemical Manufacturers (AFPM), an industry group that lobbies for US refiners and petrochemical manufacturers, applauded the STB for working to address "chronic freight rail service failures." The OETA is meant to track a carrier's targeted arrival time when it dispatches a cargo and then flag the percentage of weekly shipments that reach their destinations no later than 24 hours after an intended target, the STB said in its proposal. The AFPM, whose members include companies like Dow, Occidental Chemical and Ineos who collectively ship about 2.5mn carloads a year, said OETA data should be broken out by region, terminal, and corridor "to reveal localized bottlenecks often masked by system averages." As proposed, the STB's OETA measurement would apply to manifest train service, where trains haul an assortment of railcar types, and not to unit trains, which exclusively haul one railcar type or bulk commodity, such as coal, grain or crude. Grain shippers and the US Department of Agriculture disagreed with the STB's decision to exclude unit train shipments from the OETA measurement. The National Grain and Feed Association, whose members include Archer Daniels Midland, Bunge and other biofuels makers, said that late unit train deliveries of commodities like grain, ethanol or coal "can result in proportionally greater harm to the shipper/receiver" than smaller manifest shipments. The USDA agreed that unit train shipments should be included in the OETA measurement, and pointed out that about 75pc of US railed corn and soybean shipments in 2023 traveled in trains hauling more than 75 railcars, which would not be captured by manifest shipment data. Demand for agricultural products is highly seasonal, and missed delivery windows "can halt processing lines, disrupt export programs, and force shippers to carry excess private car inventory to buffer uncertainty," the agency said. The Association of American Railroads (AAR), which lobbies on behalf of Class I railroads, pushed back on industry requests to widen the OETA to include unit train shipments, and told the STB that several railroads do not currently generate the metrics. Adding the reporting requirements "would add regulatory burden, waste resources, and misrepresent service on the network," the AAR said. By Chris Baltimore Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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