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
Houthis signal Red Sea attacks pause after Gaza truce
Houthis signal Red Sea attacks pause after Gaza truce
Dubai, 17 January (Argus) — The Yemen-based Houthi militant group said it will monitor implementation of a temporary ceasefire between Israel and Gaza-based Hamas, raising the possibility of a reprieve for shipping in the Red Sea, but will remain prepared for military action if the deal is breached. "Our position regarding the situation in Gaza is linked to the position of our brothers in the Palestinian [armed] factions," Houthi leader Abdul-Malik al-Houthi said in a televised speech on 16 January. "We will continue to monitor the stages of implementation of the ceasefire agreement in Gaza, and any Israeli [violation], we will be directly ready to support militarily the Palestinian people." Al-Houthi's remarks suggest a halt in his Iran-backed group's campaign against shipping passing through the mouth of the Red Sea and against Israel directly. But with no clarity if he was referring to attacks on Israel or shipping lanes, shipping firms are likely to remain cautious about returning to the Red Sea. The Houthis began attacking commercial vessels with western and Israeli affiliations in the Red Sea and Gulf of Aden following an escalation of fighting between Hamas and Israel. Al-Houthi said his group have carried out 1,255 operations, including using ballistic missiles, drones and gunboats, since November 2023. But the risk of an attack in the Red Sea remains despite the ceasefire between Hamas and Israel, tanker owner Frontline said today. "We [are] all hopeful with the ceasefire, but… any ceasefire will be vulnerable with risk of [a] crew being caught if it breaks," Frontline chief executive Lars Barstad wrote on X. The possibility of an attack has compelled many ship operators to forego the Suez Canal in favor of longer voyages around the Cape of Good Hope in the last year, adding time and cost to movement of commodities. Transit of liquid and dry cargoes through the Suez Canal totaled 343mn t last year, less than half the 763mn t in 2023, according to data from Kpler. The ceasefire deal was announced late on Wednesday, 15 January, by Qatar and the US, two of the three countries that have been helping to mediate the negotiations between Israel and Hamas. Egypt is the third. Israel's security cabinet will meet today to sign off on the deal, and will send it for approval from the full government. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Mexico’s oil states led labor market losers in 2024
Mexico’s oil states led labor market losers in 2024
Mexico City, 16 January (Argus) — Mexico's oil and gas-dependent states led state job losses in 2024, driven by a sharp contraction in spending by state-owned Pemex and the completion of the Olmeca refinery, according to energy market sources and state data, even as two-thirds of the country's states posted job growth. Annually, the total employment in Mexico grew by 213,993 jobs in 2024, 67pc fewer than the 651,490 jobs added in 2023, according to the Mexican social security (IMSS) institute's tally of formal jobs, which have full benefits like better access to housing credits and public medical services. The deceleration in the number of jobs created last year adds to signals of a Mexican economy that was cooling as the year progressed, according to economists and energy market sources. "In 2024, the second lowest generation of jobs in the last 15 years was recorded, only after 2020, the year in which the Covid-19 pandemic hit," according to a report from Mexican think tank Mexico Como Vamos. Tabasco state, one of the most important for the energy sector in Mexico, led the reduction in employment among the 11 states that experienced job losses during 2024. Tabasco lost 28,675 jobs over the year, for a 12pc annual decline in employment in the state, according to IMSS data. Twenty-one states, including the capital, posted job growth. Campeche, the state with the second biggest annual percentage of job losses, and Tamaulipas, the other state with a high dependence on the oil sector, also reported significant declines in 2024, with annual formal job losses of 5,952 and 3,120, representing 4pc and 1pc decreases from a year earlier, respectively. These IMSS figures only account for formal jobs registered with the institute, which provide access to medical, pensions, and housing credits, and totaled 22.24mn as of December. The official statistics agency Inegi counts employment nationwide at 59.5mn as of the third quarter last year. Inegi's count of employment includes the informal sector, made up of jobs without social security and other benefits. Inegi's estimates put the informal labor sector at over 54pc of all jobs. According to IMSS, the country lost 405,259 jobs in December compared with November, the largest loss recorded for that month since 2000. Still, December is typically marked by heavy job losses because of seasonal adjustments. But last year the final month's tally was pulled even lower than normal by overall weak hiring over the year, Inegi said, even as total job growth was positive for the full year. While the labor situation in Mexico worsened in 2024 because of the weakening of the national economy, including a sharp depreciation of the peso to the dollar, the decline has hit the states most closely tied to the oil and gas sector and Pemex spending, said Carlos Ramirez, founder of consultancy Integralia. Tabasco hangover "Tabasco benefited greatly from the investment poured into Pemex by the administration of AMLO (former president Juan Manuel Lopez Obrador), Ramirez said. "This is going to change now with the (Claudia) Sheinbaum administration, and the state will suffer a hangover as the new government reduces its support for the oil and gas industry." Still, the national unemployment rate is low, at 2.6pc in November, according to Inegi. And the country added 361,000 jobs in the third quarter from a year earlier, according to Inegi's broader base of data. But the economy was slowing in the second half of 2024. Growth in gross domestic product slowed to an annual 1.6pc in the third quarter from 2.1pc in the second quarter, according to Inegi. Inegi's IGAE, an index that tracks the real economy, showed that the Mexican economy contracted 0.73pc in October, as economists lowered growth estimates for the Mexican economy for this year. Pemex chief executive Victor Rodriguez in early October implemented a 20pc cut to the company's upstream budget, aiming to save Ps26.78bn ($1.32bn). This decision, combined with delays in payments for contracts and a halt in new service agreements, severely impacted local companies in Tabasco and Campeche, according to oil services company association Amespac. Some companies announced layoffs as Pemex's financial constraints rippled through the supply chain. Part of Tabasco's workforce reduction could also be tied to the near-completion of the 340,000 b/d Olmeca refinery, said Jesus Carrillo, an analyst at think tank IMCO. While the major construction phases have concluded, the facility remains in a testing phase, contrary to Pemex's previous promises of full operations in 2024. Despite the recent downturn, heavy Pemex spending during the administration of former president Lopez Obrador made Tabasco the leading state in job creation between December 2018 and December 2024, Ramirez said. But with the refinery now completed and Pemex projecting further budget cuts for 2025, analysts expect labor market challenges in oil-reliant states to persist. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Monjasa first to offer biofuel for bunkering in Panama
Monjasa first to offer biofuel for bunkering in Panama
New York, 16 January (Argus) — Marine fuel supplier Monjasa will be the first biofuel for bunkering supplier in Panama. Monjasa's B30 is a blend of 30pc used cooking oil methyl ester (Ucome) with 70pc very low-sulphur fuel oil (VLSFO). It is available for delivery on barge in Cristobal, on Panama's Caribbean coast. Monjasa can also deliver B30 in Balboa, on the Pacific side of the canal "although this could lead to price adjustments due to logistical changes", Monjasa told Argus . The company can supply up to 7,000 metric tonnes (t) per month, but it aims to increase this capacity as well as offer additional grades and blend ratios. VLSFO demand on Panama's Caribbean side averaged at 57,912t/month in 2024 according to Panama Canal Authority data. Monjasa also sells biofuels for bunkering in Colombia and Peru. In Colombia, Monjasa has seen biofuel demand from container ship companies, RoRo vessels and most recently from cruise ships. In Peru, demand has been driven by dry bulk vessels used by several mining companies. In northwest Europe, B30 was assessed at $813/t average in the first half of January, 54pc higher compared than VLSFO which was at $528/t. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Marine biodiesel may face future supply constraints:DNV
Marine biodiesel may face future supply constraints:DNV
London, 16 January (Argus) — The use of biofuels in maritime transport has good potential to reduce greenhouse gas (GHG) emissions in shipping, but its supply may become tight in the future, according to Norwegian classification agency DNV. A vast majority of biodiesel production is currently routed towards the road sector, as most European countries have biofuel blending requirements for road diesel and gasoline. DNV's report said that the percentage of marine biodiesel used in shipping accounted for 0.3pc of the sector's total energy use in 2023 — according to data from the International Energy Agency (IEA). Fatty acid methyl ester (Fame) and hydrotreated vegetable oil (HVO) are currently the primary types of biofuels used in marine biodiesel blends, with Fame most prominent. The report acknowledged that waste-based Fame biodiesel can be utilised to meet regulations such as FuelEU Maritime , which came into effect this year, and potential International Maritime Organisation (IMO) mid-term measures in 2027 — which DNV expects to significantly boost demand for marine biodiesel. But with increasing demand and incentives to switch to marine biodiesel from conventional bunker fuels, the report pointed to potential supply limitations in the long term. These include scarcity of advanced waste-based feedstock and competition with other sectors such as aviation. Feedstock challenges could revolve around sources such as used cooking oil (UCO), and as a result DNV said that some suppliers are "investigating" the viability of alternative waste feedstocks that can feed into the marine sector. Biofuels produced from food and feed crops are not viable for regulations such as FuelEU Maritime, and it remains unclear whether they can meet the sustainability criteria under upcoming IMO mid-term measures. Further to feedstock scarcity are concerns around competition with other sectors, which have been voiced by market participants. But some participants have also said that while biodiesel suppliers may channel their feedstock towards aviation fuels because of higher margins, a potential source of fuel for marine could stem from by-products of sustainable aviation fuel (SAF) production. DNV's report also advised caution when using biofuels that do not comply with ISO 8217:2024 . This is more specifically relevant to off-spec biofuel blends or blends comprising novel feedstocks such as cashew nut shell liquid . By Hussein Al-Khalisy and Natalia Coelho Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
