Viewpoint: European VLSFO demand to fall in 2026

Spanish Market: Oil products
31/12/25

Very-low sulphur fuel oil (VLSFO) demand at European ports is likely to fall in 2026, due to decarbonisation regulations and sulphur content restrictions.

Shipowners say VLSFO is unattractive, even at lower prices. Spot VLSFO traded 13pc lower on the year at the Gibraltar-Algeciras-Ceuta (GAC) hub in 2025 to date. MGO prices fell by 8pc in the same time.

This is likely to continue into 2026, with European regulations reducing demand for fuel oil. Greenhouse gas (GHG) emissions abatement costs will become significantly higher in 2026 with the advancement of EU ETS regulations, the EU Renewable Energy Directive (RED) III transposition in various countries, and the existing FuelEU Maritime requirements.

A probable oversupply of VLSFO would extend a trend observed in 2025. Suppliers, especially in the Mediterranean region, noticed a steady slowdown in VLSFO demand and increased demand for fuels that comply with the requirements of the Mediterranean Emissions Control Area (ECA) that came into effect in May.

An ECA requires bunker fuels utilised in that area are limited to 0.1pc sulphur content. VLSFO does not meet this unless an exhaust scrubber is used, but only around 5pc of vessels globally are equipped with these, according to DNV data.

The Mediterranean ECA boosted demand for MGO in the region's ports and supported gasoil import flows to GAC from northwest Europe, to the extent there was a shortage of prompt MGO availability at Amsterdam-Rotterdam-Antwerp (ARA) in the second and third quarters of 2025. Suppliers said firmer demand in Mediterranean ports in 2026 should keep these ARA-GAC flows elevated.

Consequent MGO tightness in northwest Europe, combined with ECAs spanning the majority of European waters, could incentivise demand for ultra-low sulphur fuel oil (ULSFO) with sulphur content meeting the ECA limit of 0.1pc. ULSFO sales in Rotterdam in the third quarter of 2025 were the highest since the first quarter of 2020.

Mediterranean suppliers have increased ULSFO availability in key ports such as Algeciras, Malta, Piraeus and Istanbul. In the latter, demand for ULSFO is already higher than that for VLSFO and HSFO in the spot market and is on par with demand for MGO, according to local suppliers.

For the coming year, market participants are likely to continue expanding supply of ULSFO, with at least one new supplier starting to offer the product in Piraeus. Even so, the amount of purchases in the spot market is unlikely to increase significantly, since the main destination of ULSFO purchases tends to be for contract ferries, suppliers said.

By Gabriel Tassi Lara

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

31/12/25

Viewpoint: Asia's shipping faces uncertainty in 2026

Singapore, 31 December (Argus) — The adoption of green marine fuels in Asia's shipping sector is expected to slow in 2026, following a turbulent year marked by the International Maritime Organization's (IMO) deferment of its proposed Net Zero Framework (NZF) in October. The sector is revisiting investment plans affected by geopolitics and global policy making, and faces further challenges in the year ahead . Biofuel blends slow down "We don't see a sizeable increase in bio-bunker [demand next year]," a key Singapore-based trader said. Year-on-year demand for biofuel blends at the port of Singapore dropped by 46.6pc to 62,200t in November, preliminary data from the Maritime and Port Authority of Singapore (MPA) show. Demand for bio-bunkers is likely to be slow but steady in 2026 compared with this year. The implementation of RED III affected this market throughout the last quarter of 2025, the trader said. Trading of used cooking oil methyl ester (Ucome) based blends with very-low-sulphur fuel oil (VLSFO) and high-sulphur fuel oil (HSFO) has been slow because buyers anticipate tighter sustainability rules and the exclusion of key waste-based biofuels under RED III . This is likely to raise compliance costs and redirect European demand toward advanced grades. But total bio-blend consumption in Singapore reached 1.2mn t during January-November this year, 42.8pc higher than the full-year total for 2024. Biofuels were the first alternative fuel adopted by the shipping sector, and their adoption has grown quickly since 2022. But a slowdown in demand could occur in 2026 because of uncertainty following the deferment of key frameworks under the IMO's NZF. The IMO's proposed Life-Cycle Assessment (LCA) Guidelines are one of these frameworks. The LCA guidelines aimed to help shipowners calculate their compliance on a well-to-tank (WtT) and tank-to-wake (TtW) basis. LNG poised for further growth LNG as a bunker fuel maintained its robust consumption growth in Singapore this year. Total LNG consumption was 631,000t in January-November, up by 36pc from the same period a year earlier. LNG bunkering is growing at key ports in China , and infrastructure has developed throughout this year. But LNG barges remain a bottleneck, with only a handful available across the Asia-Pacific region. Three barges are operational in Singapore, with a few more on the order books. The estimated $80mn cost to build an LNG barge is a key deterrent. Growth in LNG bunkering is likely to continue as Asian shipowners have invested in building LNG-fuelled vessels. The total number of LNG dual-fuelled newbuilds on order books was 966, the highest for any alternative fuel, the latest data from Norwegian classification agency DNV show. Conventional bunkers anchor demand Alternative fuels are the focus of the latest developments in marine fuels, but conventional fossil fuels remain an option because of their lower price . The shipping sector's firm demand for conventional fuels was reflected in sales in Singapore. Year-to-date sales accounted for 96pc share of the total bunker consumption at around 49.5mn t from January to November, MPA data show. HSFO demand is likely to stay supported in the coming year, especially if ample supplies in Asia continue to weigh on prices in the near term. Most shipowners and charterers still prioritise crew safety, opting for the longer shipping route around the Cape of Good Hope instead of travelling through the Red Sea, where there are possibilities of maritime attacks by Yemen's Houthi group. Refuelling with HSFO instead of VLSFO translates into significant cost savings and payback on scrubber investments for vessel owners, while allowing ships to comply with 0.5pc sulphur emission caps. The scrubber spread, the price difference between VLSFO and HSFO, averaged $74.38/t this year as of 26 December. Moving forward, demand for conventional fuel oil in Singapore will likely be sustained, as over 97pc of ships in operation do not have alternative fuel technology, DNV data show. But further growth in conventional fuel buying interest may be capped, given the shipping sector's transition to net-zero carbon fuels. The number of ships capable of operating on alternative fuels is set to nearly double between 2024 and 2028 based on the current order book, DNV said in its Maritime Forecast to 2050. "Trading patterns, cargo owners' willingness to pay a premium for green transport, asset value, and technical challenges affect shipowners' willingness to invest in alternative fuel-capable ships," DNV said. Mahua Mitra and Cassia Teo Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: Northeast diesel faces 2026 supply risks

30/12/25

Viewpoint: Northeast diesel faces 2026 supply risks

Houston, 30 December (Argus) — The US northeast diesel and heating oil market enters 2026 with lingering supply vulnerabilities despite recent improvements in flows. While imports of conventional fuels have resumed, structural constraints and global dynamics suggest that volatility will remain a defining feature in the coming years. Inventories of ultra-low sulphur diesel (ULSD) and ultra-low sulphur heating oil (ULSH) at the southern US Atlantic coast fell to the lowest level in more than 11-years this summer at 7.67mn bl. That pulled barrels sourced out of the US Gulf coast via the Colonial pipeline away from the line's final destination in the US northeast. New York Harbor's dependence on imports will persist due to limited refining capacity. While Canadian and Mexican flows improved late in 2025, upcoming refinery maintenance in Canada and operational uncertainties at Mexico's Olmeca refinery could disrupt supply in early 2026. Canadian refiner Suncor began 15 weeks of maintenance on 11 December at its 137,000 b/d Montreal refinery in Quebec, according to an announcement filed with Association industrielle de l'Est de Montreal, a near-term risk for US northeast markets. US imports from Canada nearly halved on the month in October, according to Vortexa ship-tracking data, partially caused by a turnaround at Irving Oil's 320,000 b/d St John refinery that ended in November. Following the turnaround, US Atlantic coast imports of ULSD and ULSH were 134,000 b/d, nearly double the level from a year earlier. Multiple cargoes came from Irving's St John refinery, according to Kpler ship-tracking data. But upcoming refinery work may once again come into play. Mexico's state-owned Pemex's 340,000 b/d Olmeca refinery recently resumed exports to the US after a near six-month period of zero loadings. Olmeca was initially highlighted as a crucial element in the Mexican government's strategy for road fuel self-sufficiency. But Pemex has also explored profitable ULSD export opportunities as local infrastructure has had difficulties absorbing the road fuel output from the Olmeca facility. Medium-range tanker BW Wren loaded around 300,000 bl of ULSD at the Dos Bocas port on 22 November and discharged throughout the southern US Atlantic coast, according to Kpler data. European diesel demand, amplified by sanctions on Russian products, kept open the US arbitrage to the Amsterdam-Rotterdam-Antwerp (ARA) hub for much of 2025. If this trend continues, Gulf coast exports to Europe could again constrain diesel flows to the Atlantic coast. In the longer term, Nigeria's planned Dangote refinery expansion — scheduled for 2028 — may ease European demand for US barrels, but competition for supply will remain intense until then. Even though the US Atlantic coast remains heavily reliant on domestic and imported cargoes, the fungibility of diesel and heating oil grades provides leeway for sourcing these barrels. In mid-December, stockpiles of ULSD and ULSH at the central US Atlantic coast were down by 27pc on the year at 12.8mn bl, US Energy Information Administration data shows. Cash differentials that trade against the underlying Nymex basis — often a benchmark for regional demand — fell to 14-month and two-year lows during this period. Weaker demand for conventional diesel and heating oil in the New York region is partly driven by the growing availability and market share of B99 biodiesel. Three states across the northeast, including New York, are actively promoting biofuels adoption through legislative measures, tax incentives and infrastructure investments aimed at reducing emissions in heating systems and commercial transportation. The state of New York this year doubled its heating oil blend mandate to 10pc biodiesel (B10), while Connecticut and Rhode Island have similar B10 and B20 mandates, respectively. While biofuels help offset reduced inventories of conventional fuels, New York Harbor B99 biodiesel differentials to heating oil have traded at a premium for the first quarter 2026 because of feedstock and supply constraints, weaker credit incentives and policy uncertainty. Federal biofuel blending mandates for 2026 and 2027 remain unsettled, leading some producers to idle operations heading into the new year as they await clearer direction. In the short term, softer demand and renewed import flows suggest improved supply security for the US Atlantic coast. However, evolving federal policies and shifting global dynamics ensure that volatility will remain a hallmark of the region's diesel market. By Craig Ross and Blake Del Papa Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: Argentina edges toward fuel export status

30/12/25

Viewpoint: Argentina edges toward fuel export status

Sao Paulo, 30 December (Argus) — Argentina is laying the groundwork to transition from a net importer of transportation fuels to a net exporter in the coming months, driven by deep structural changes in its energy industry in the past year. The changes were set in motion largely by President Javier Milei's administration when it took office in late 2023, but it is not yet clear if the net-exporter status will stick, given other changes in fuel supply and demand throughout the region. The first major driver of this transformation was the gradual removal of fuel subsidies by Milei's administration. For decades, subsidies kept domestic fuel prices artificially low, encouraging high consumption and distorting trade flows. Their rollback pushed retail prices upward, which curbed demand growth and reduced smuggling into neighboring countries such as Brazil, Paraguay and Uruguay. Retail diesel and gasoline sales in Argentina averaged 290,684 b/d from January-October 2025, according to the latest available government data. That is up by 1pc from the same period in 2024, but down by 8pc from 2023, before Milei took office. Another critical reform was the redefinition of state-owned power grid operator Cammesa's role. Historically the company coordinated subsidized fuel purchases for thermal power plants throughout the country, creating a steady demand for imported gasoil. By narrowing Cammesa's mandate to focus exclusively on managing the national power grid, Argentina dismantled a key mechanism that sustained liquid fuel imports. This change coincided with a broader pivot toward natural gas for power generating fuel, sourced from Argentina's Vaca Muerta shale formation, which has become the backbone of the country's energy strategy. Cammesa data shows gasoil consumption by thermal plants fell by 56pc from 2023-2025, while natural gas use rose by 13pc over the same period. Other sources such as fuel oil and coal also had sharp declines during the same period, falling by 82pc and 34pc, respectively. Renewables played a supporting role. Wind and solar generation accounted for 16pc of Argentina's electricity demand in 2024, up from 14pc in 2023, and are on track to reach roughly 18pc by the end of 2025. Although these figures remain modest compared to natural gas, they signal a gradual diversification of the energy mix that further reduces reliance on liquid fuels for power generation. Refiners firing on all cylinders On the supply side, refiners are operating near full capacity and investing heavily to process Medanito crude from Vaca Muerta. YPF, the state-owned oil company, has allocated $600mn to upgrade its 120,000 b/d Lujan de Cuyo refinery during the last three years, adding a hydrotreating reactor to cut sulphur content in diesel to a maximum of 10ppm. The work is part of YPF's New Fuel Specifications project, expected to be finished in 2026. Lujan de Cuyo, Argentina's second largest refinery, accounting for more than 35pc of YPF's capacity, produced 17,094 b/d of ultra-low sulphur diesel (ULSD) from January-October, up by 3pc from the same period in 2024. Pan American Energy's 94,350 b/d Campana refinery underwent maintenance from January-February 2025 that improved capacity, but a big breakthrough is expected in 2029 when a new distillation tower tailored for lighter crudes is planned to be installed. These upgrades position Argentina to compete in regional markets where ULSD and premium gasoline are increasingly in demand. The results are already visible. From January to October 2025, Pan American Energy shipped nearly 30,000m³ (625 b/d) of ULSD to Paraguay and over 53,000m³ (1,104 b/d) to Uruguay. Pampa Energia sold 8,000m³ (167 b/d) of premium gasoline to Paraguay, while YPF exported 19,000m³ (396 b/d) to Uruguay. These volumes are modest in global terms but significant for a country that, until recently, relied heavily on imports to meet domestic needs. Despite these gains, Argentina's export ambitions face structural constraints. Refining capacity remains limited, and there are no immediate plans for large-scale expansions. This means export growth will depend on persistently subdued local demand, a condition that could change if economic recovery spurs consumption. Regional markets also offer finite ability to absorb any surplus Argentinian road fuels. Renewable road fuels are also becoming more attractive across Latin America as alternatives to conventional options. For now, Argentina appears poised to redefine its energy identity, but the durability of this transformation remains an open question. By Flavia Alemi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: Brazil’s asphalt demand to grow in 2026

29/12/25

Viewpoint: Brazil’s asphalt demand to grow in 2026

Sao Paulo, 29 December (Argus) — Brazil's asphalt demand in 2026 is expected to surpass this year's level but is unlikely to reach the record set in 2024. Brazil's asphalt market is on track to close 2025 with sales of around 2.5mn metric tonnes (t), according to industry estimates, down from a record 3.17mn t in sales in 2024. Market participants expect a modest increase in 2026, with volumes projected to reach 2.6mn t. The anticipated growth is mostly related to Brazil's upcoming presidential elections, which traditionally spur government spending on roadworks and public infrastructure as part of campaign-driven investment cycles. While election years typically boost asphalt consumption, market participants are not expecting a dramatic surge on par with 2024. Borrowing costs remain at their highest levels since 2006, a factor that can diminish private investment in roads. Reduced budgets will also play a part in 2026 demand. Congress last week approved the annual budget bill , which reduced the transportation ministry's budget to R52.2bn ($9.4bn). Infrastructure spending will fall to R18.75bn in the coming year, down by about 36pc from R29.3bn in 2025. Funds allocated for the National Department of Transport Infrastructure (DNIT) in September, which takes responsibility for most paving projects in the country, also decreased in comparison to 2025. The amount allocated dropped to R11.7bn from R12.1bn this year. Budget cuts and delayed spending approvals reduced asphalt demand in 2025 by nearly 20pc from the year prior. [The federal government froze R31.3bn from the annual budget]( https://direct.argusmedia.com/newsandanalysis/article/2696689), including R1.5bn from the transport ministry, which limited funds for highway maintenance and new paving projects. This freeze, combined with the late approval of the 2025 budget law in April, restricted public agencies to minimal monthly spending early in the year and caused asphalt sales in the first quarter to drop by 15pc from a year earlier. Production and imports of asphalt have mirrored the year's weak demand. Domestic output fell by 25pc in the first half of the year, with state-controlled Petrobras' Replan refinery posting the steepest decline, down by 41pc from a year earlier. Sales during the same period dropped 23pc year on year, reinforcing a pessimistic outlook that emerged in May. The decline in asphalt imports was less pronounced. Brazil imported roughly 290,000t in the first half, or around 8pc less than a year earlier, according to official data from ComexStat. Although demand improved in the second half thanks to drier weather and increased DNIT spending, September volumes were still 25pc below prior year levels. Imports rose later in the year, but overall consumption remained subdued, shaped by fiscal constraints, delayed tenders and structural challenges in Brazil's infrastructure planning. Elsewhere in South America Argentina's asphalt imports in 2025 dropped around 9pc compared with the prior year, according to data from Kpler. This was the continuation of a trend that began in 2023, when Argentinian president Javier Milei came to power. Asphalt imports this year are expected to be down by 50pc compared with 2022. To help reduce the country's budget deficit, Milei froze all public works, including those involving paving activities. This rule remains in place, but the government has started to auction off more than 9,000km of highways under concession agreements. So far, two auctions have been launched as part of this program. Argentina's asphalt imports for 2026 are expected to remain flat with this year. In Chile, a country that imports most of its asphalt needs, imports have remained relatively stable for the past nine years. Only 2024 was an anomaly, when the country imported more than 150,000t of asphalt, a surge of almost 45pc compared with 2023. Imports this year are expected to drop more than 30pc to 107,000t, roughly the same level as in other years. Chile's new right-wing president, Jose Antonio Kast, will take over in 2026. And if he focuses on private investments rather than public works, asphalt imports could trend flat-to-lower in 2026. By Julio Viana Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ghana refinery restarts after nearly 5 years offline

29/12/25

Ghana refinery restarts after nearly 5 years offline

London, 29 December (Argus) — Ghana's state-owned 45,000 b/d Tema refinery has resumed operations after sitting idle since April 2021. The restart will help ease the country's reliance on clean product imports, which have more than doubled since 2017 to 128,000 b/d this year, including 65,000 b/d of diesel/gasoil and 52,000 b/d of gasoline, according to Kpler data. Nigeria's 650,000 b/d Dangote refinery was the biggest supplier this year, sending 27,000 b/d of oil products to Ghana. The Tema refinery is running at 28,000 b/d, with all product streams "going to storage for the first time in several years", operator TOR said. The site has capacity to store 260,000t of products and 1.93mn bl of crude. Three months of maintenance work on the crude distillation unit (CDU) finished on 30 October, and regulators cleared operations to restart on 19 December. The government appointed new management in May, led by Edmond Kombat, tasked with restarting the CDU and a 14,000 b/d residue fluid catalytic cracker. The refinery missed an October deadline to resume operations. TOR plans to lift crude runs to nameplate capacity once a new furnace is integrated into the atmospheric distillation unit. Medium-term upgrades include raising CDU capacity to 60,000 b/d and replacing a 6,500 b/d catalytic reformer with a 10,000 b/d continuous catalytic reformer. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more

Viewpoint: European VLSFO demand to fall in 2026

Related news posts

Viewpoint: Asia's shipping faces uncertainty in 2026

Viewpoint: Asia's shipping faces uncertainty in 2026

Viewpoint: Northeast diesel faces 2026 supply risks

Viewpoint: Northeast diesel faces 2026 supply risks

Viewpoint: Argentina edges toward fuel export status

Viewpoint: Argentina edges toward fuel export status

Viewpoint: Brazil’s asphalt demand to grow in 2026

Viewpoint: Brazil’s asphalt demand to grow in 2026

Ghana refinery restarts after nearly 5 years offline

Ghana refinery restarts after nearly 5 years offline

Argus Specialised Freight

Argus Specialised Freight

Argus US Crack Spread Forward Curves

Argus US Crack Spread Forward Curves

Argus Tanker Freight

Argus Petroleum Transportation North America

Argus Mideast Gulf and Indian Ocean Products

Business intelligence reports