Singapore — BP Singapore has merged its fuel oil and gasoil trading teams ahead of the implementation of a tougher sulfur cap on bunker fuel from 2020, trade sources said this week.

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This could not be confirmed directly with BP at time of publication.

The International Maritime Organization’s global bunker sulfur cap is due to fall to 0.5% from 3.5% at the start of 2020, forcing most ship operators to cease burning fuel oil and switch to cleaner alternatives.

High sulfur fuel oil demand with maximum 3.5% sulfur is expected to plunge as a result, as ships will no longer be able to use it. Demand for low sulfur fuel oil in Singapore is expected to grow, but there will not be enough supply available to cover all the additional demand, traders said.

As a result, ships are likely to turn to gasoil, which typically contains less sulfur than fuel oil, in the range of 10-500 ppm.

« Fuel oil demand will decline, but bunker demand will not get lower. The borders between fuel oil and gasoil are disappearing — traders should know both markets, » a Singapore-based trader said.

« When fuel oil demand goes down, fuel oil traders can do other stuff, » said another trader in Singapore.

A third fuel oil trader said other traders could follow BP’s lead as the sector gears up for the implementation of IMO 2020.

–Atsuko Kawasaki,

–Rajesh Nair,

–Edited by Wendy Wells,

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