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
Iran strikes trigger regional airspace closure
Iran strikes trigger regional airspace closure
Dubai, 28 February (Argus) — Several Mideast Gulf countries have closed their airspace and major international airlines have suspended operations after Iran launched retaliatory missile strikes in response to US–Israeli attacks earlier on Saturday , triggering widespread disruption to one of the world's busiest aviation corridors. Dubai Airports confirmed cancellations and delays at Dubai International (DXB) and Al Maktoum International (DWC) because of a "partial and temporary" closure of UAE airspace as a precautionary measure. Emirates, the world's largest international airline by passenger traffic, has suspended all flights to and from Dubai, citing multiple regional airspace closures. Qatar has also temporarily closed its airspace, halting operations of Qatar Airways, while Kuwait Airways has postponed all arrivals and departures at Kuwait International Airport, citing passenger and aircraft safety. Israel and Iran have both shut their airspace following the exchange of strikes, while Iraq, Oman and Bahrain have also imposed airspace restrictions. Jordan's Royal Jordanian said it continues operating normally as long as national airspace remains open and safe, but warned that some flights to affected destinations could face schedule changes. European aviation regulator EASA issued a Conflict Zone Information Bulletin advising airlines not to operate in the affected airspace "at all flight levels and altitudes", warning of a "high risk to civil aviation" given the ongoing military action. Among international carriers suspending or cancelling services to the Mideast Gulf and Israel are Turkish Airlines, Lufthansa and British Airways. British Airways said it has cancelled flights to Tel Aviv and Bahrain until 3 March and has scrapped its service to Amman in Jordan. The Middle East forms a critical east–west air transit hub linking Europe, Asia and Africa, with Dubai, Doha and Abu Dhabi among the world's largest long-haul transfer points. The closure of multiple airspace zones forces airlines to cancel services or reroute around restricted areas, increasing flight times and fuel burn and disrupting passenger flows. By Bachar Halabi and Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
HF Sinclair CEO and CFO to leave company
HF Sinclair CEO and CFO to leave company
Houston, 27 February (Argus) — US independent refiner HF Sinclair will part with its chief executive Timothy Go and chief financial officer Atanas Atanasov after concerns raised regarding disclosure processes. The company expects to negotiate a mutually agreeable separation arrangement with Go and Atanasov, HF Sinclair said Friday in a filing with the US Securities and Exchange Commission (SEC). HF Sinclair's board of directors on 24 February received and accepted a request from Atanasov to take a voluntary leave of absence from his duties, the company said in the filing. The board appointed the company's chief accounting officer and controller Vivek Garg as acting chief financial officer. HF Sinclair previously disclosed that Go on 17 February also requested and received a leave of absence from the board. Current board chair Franklin Myers was elected as chief executive on a temporary basis. According to Friday's SEC filing, on 26 January the company's audit committee began to assess "certain matters relating to the company's disclosure processes" after Atanasov raised concerns that certain actions taken by Go created an unfavorable "tone at the top" in relation to the 2025 disclosure processes. The audit committee concluded that Go's actions did not create an unfavorable "tone at the top" and that the company's disclosure controls and procedures are effective, the SEC filing said. But the board said it developed separate concerns about the approach taken by Go in some communications to management during the 2025 disclosure processes, as well as concerns relating to actions taken by Atanasov "bearing upon the review process" and "the viability of his future working relationships with other members of the company's management team." Delek did not disclose how long Myers and Garg were expected to serve in the temporary roles. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Venezuela reviewing latest ad-hoc oil contracts
Venezuela reviewing latest ad-hoc oil contracts
Caracas, 27 February (Argus) — Venezuela's state-owned oil firm PdV is reviewing 26 joint ventures granted from 2024-2025 to align them with changes to the hydrocarbons law or cancel them after the US has demanded reforms for investors. Now president Rodriguez began implementing new types of joint ventures, including some known as productive participation agreements (CPPs), after she took on the role of oil minister in October 2024 as part of her vice presidency. The arrangements could be retrofitted to match provisions under the recently modified hydrocarbons law, one PdV source told Argus , but more likely they may be cancelled. The 26 oil contracts granted after the ouster and arrest of former oil minister Pedro Tellechea in October 2024 and before the US seized former Venezuela leader Nicolas Maduro on 3 January are being reviewed, the PdV source said. Of those, 13 are CPPs. The PdV source said the US is pressuring Rodriguez to end those contracts since most of the other partners are non-US or little-known entities. "I think they will all be suspended," the source said. "What the Americans have told us is [any deals] need to be authorized by us." Rodriguez and Maduro granted the 26 deals in the two years but provided few public details. Even after Maduro was arrested on 3 January, Rodriguez still described the CPPs as a way forward to increase Venezuelan oil production. But once the law was modified the government and its partners were granted six months to adopt the contracts to the new law or cancel them. Sources say the arrangements were doomed to fail, since they were laboring from the beginning under the weight of US sanctions that are only now beginning to be lifted. "She granted two dozen contracts, but only five of those ... are in actual production", a former Venezuelan oil minister said. "Eliminating or retooling those contracts will have zero impact on production." Retooling those agreement or granting new ones may instead help to increase Venezuela's production from its plateau of about 1mn b/d in recent months. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Refiners warn EPA against late fuel waivers: Update
Refiners warn EPA against late fuel waivers: Update
Updates with comments from EPA New York, 26 February (Argus) — A group of US oil refiners that warned against a costly shift to a boutique fuel blend in the midcontinent want President Donald Trump's administration to let the states transition as planned this summer to avoid market turmoil. The Midwestern bloc was supposed to move last year to the lower-volatility summertime fuel, which would allow retailers to keep selling both typical 10pc ethanol gasoline (E10) and blends with up to 15pc ethanol (E15). But the Environmental Protection Agency (EPA) punted the shift just days before summer driving season, frustrating fuel makers and distributors that had already invested millions to move to the boutique blend. "Fuel suppliers should not be put in the same situation again this year", the American Fuel & Petrochemical Manufacturers (AFPM) told EPA on Wednesday, according to a letter shared with Argus . The risk of changing rules remains. While seven states are still set to transition, Ohio backed out last month. Midwestern governors that previously saw the fuel shift as a way to help out corn farmers and pressure oil refiners to lobby for simpler federal E15 rules are now staring down the possibility of higher pump prices in an election year. Any other states that want to cancel the fuel change should have to make a request to do so immediately, according to the refiner group, and at the very least before pipelines start requiring the special blend by 1 April. EPA has not given states any deadline to request changes to their summer fuel market rules. EPA justified emergency waivers last summer aborting the midcontinent fuel change and allowing E15 gasoline across the country by warning of "extreme and unusual fuel supply circumstances caused by global conflicts". But AFPM warned EPA that such a move this year would be on shakier legal footing, pointing to data showing ample gasoline stocks across the US. The refiners' advocacy comes as a council of Republicans in the US House of Representatives has missed multiple deadlines for reaching agreement on biofuel policy reforms. Earlier drafts circulated by the task force floated allowing year-round E15 sales nationwide and stopping the Midwestern states' transition. The Clean Air Act exempts E10 from summertime smog rules that would otherwise prevent its sale but does not extend the same treatment to E15, despite a similar volatility profile. The midcontinent states as a workaround won EPA approval to opt out of the special treatment for E10, effectively putting E10 and E15 on equal footing by requiring lower-volatility blendstocks for both. The consequence is more complicated logistics for refiners, which may have to cut production of butane, which raises volatility, or invest in infrastructure to store and transport excess supplies. The states approved to move to the lower-volatility gasoline this summer are Illinois, Iowa, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin. Kansas has signaled it could join them in the future, although EPA said it was already too late for any new states to join the Midwestern bloc this summer. "The Trump EPA will continue to work with states to reduce unnecessary costs and uncertainty and ensure that gas prices — which are down thanks to President Trump — remain affordable for all Americans through the summer", EPA said. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.