FW: ION Morning Rundown

A senior Chinese official said on Tuesday it is difficult to proceed with trade talks with the United States while Washington is putting "a knife to China’s neck", a day after both sides heaped fresh tariffs on each other’s goods.  When the talks can restart would depend on the "will" of the United States, Vice Commerce Minister Wang Shouwen said at a news conference in Beijing.  U.S. tariffs on $200 billion worth of Chinese goods and retaliatory taxes by Beijing on $60 billion worth of U.S. products including liquefied natural gas (LNG) kicked in on Monday, unnerving global financial markets.  "Now that the United States has adopted such a huge trade restriction measure … how can the negotiations proceed? It’s not an equal negotiation," Wang said, stressing the United States has abandoned its mutual understanding with China.  China’s top diplomat also told business people at a meeting in New York that talks could not take place against the backdrop of "threats and pressure", the Foreign Ministry said.  Certain forces in the United States have been making groundless criticisms against China about trade and security issues, which has poisoned the atmosphere for Sino-U.S. ties and is highly irresponsible, State Councillor Wang Yi was quoted as saying, without naming anyone.  "If this continues, it will destroy in an instant the gains of the last four decades of China-U.S. relations," Wang told members of the U.S.-China Business Council and National Committee on United States-China Relations.  U.S. representatives there included Blackstone Group LP co-founder and Chief Executive Stephen Schwarzman and Mastercard Inc Chief Executive Ajay Banga, the National Committee on United States-China Relations said on its website.  China also accused the United States of engaging in "trade bullyism", and said Washington was intimidating other countries to submit to its will, according to a white paper on the dispute published by China’s State Council, or cabinet, on Monday.  Several rounds of Sino-U.S. talks in recent months have appeared to produce no breakthroughs, and fresh mid-level negotiations which had been expected in coming weeks have been shelved after Beijing reportedly decided late last week not to send a delegation to Washington.  While Vice Commerce Minister Wang said he still hopes "there is a way out" if both sides treat each other with sincerity, analysts say neither side looks to be in the mood to compromise in the increasingly bitter dispute, raising the risk of a lengthy battle that could chill the global economy by discouraging business investment and disrupting trade.  "The sharp criticism (from Beijing on Monday) suggests that China might prefer to wait out the current U.S. administration, rather than embarking on potentially futile negotiations," Mizuho Bank said in a note to clients.  "Given these developments, it is increasingly likely that both sides will not resume negotiations for some time, at least until there is a noticeable shift in the political mood on either side."

Japan and the United States will begin a second round of trade talks in New York on Tuesday, Japan’s top government spokesman said, amid concerns in Tokyo that Japan will face greater pressure to reduce its large trade surplus.  U.S. Trade Representative Robert Lighthizer and Economy Minister Toshimitsu Motegi had been scheduled to meet on Monday evening, ahead of a Wednesday summit between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe on the sidelines of a U.N. General Assembly meeting.  Due to a scheduling issue, the U.S. side asked to delay the meeting, which is now scheduled for 8:30 a.m. EDT (1230 GMT) on Tuesday, Chief Cabinet Secretary Yoshihide Suga told a news conference.  "We believe the talks will focus on further expanding trade and investment between Japan and the U.S. to bring benefits to both nations," Suga said.  Lighthizer and Motegi met in August but failed to narrow differences on whether to open up negotiations for a bilateral free trade agreement.  Abe, after a Sunday dinner with Trump, told reporters the two had constructive talks on trade, which Motegi and Lighthizer would continue.  Japan is hoping to avert any import curbs and potentially steeper U.S. import tariffs on its cars, and fend off U.S. demands for a free trade agreement.  Japanese media have said Tokyo is considering an agreement that would lower tariffs on U.S. agriculture imports in exchange for avoiding higher tariffs on Japanese autos.

President Donald Trump didn’t bring up any new areas of contention in his Monday meeting with French President Emmanuel Macron, and the two found areas of agreement over Iran and Syria, French officials said.  Trump and Macron “discussed a wide range of international issues, including the situation in Syria, countering threats posed by Iran, and promoting fair terms of trade between the United States and the European Union,” the White House said in a statement. The meeting lasted about an hour.  French officials told reporters that Trump asked Macron for his views, listened to the answers, and didn’t seek confrontation. The official spoke on condition that their names not be used because only the president himself can be quoted on official visits.  Macron and Trump shared the same concerns about Iran’s ballistic missile program and its regional meddling, the officials said, but Trump insisted that the U.S.’s policy of imposing sanctions was bearing fruit by weakening Iran’s economy and it was therefore too early to consider talks. On Syria, they agreed to work with Turkey to save civilian lives in the Idlib area. On trade, Trump said Europe had been unfair to the U.S., and Macron replied that the U.S. has high tariffs and barriers of its own, but they agreed both sides should keep talking.  Macron has established a closer working relationship with Trump than have the leaders of Germany and Britain, though the two have had fierce clashes over Iran, trade, and above all on an issue they didn’t even discuss on Monday – climate.  Trump said he enjoyed a July visit to Paris and before Monday’s meeting he recalled for reporters his dinner with Macron at the Eiffel Tower during that visit. The two leaders later discussed Trump’s planned Nov. 11 trip to Paris to celebrate the 100th anniversary of the World War I armistice.

Oil market hears echoes of 2007/8: Kemp – Reuters News

Eleven years ago, on Monday Sept. 24, 2007, the price of Brent crude closed just below $79 per barrel, not far from where it is today.  Three days later, Brent closed above $80 for the first time in history. Less than 10 months after that, prices closed at an all-time high of $146.  Past prices are not necessarily a guide to the future, but the events of 2007/08 are a reminder that price moves are highly non-linear, especially around turning points in the cycle.  Price moves tend to accelerate in the run-up to cyclical peaks and troughs, as the market struggles to overcome a worsening deficit or surplus.  As a result, oil prices tend to rise far higher, and fall much further, than commentators thought possible just a few months earlier.

A DISTANT MIRROR

The current situation in the global economy and the oil market has many similarities to what happened in 2007 and 2008.  In the earlier episode, the global economy had been expanding strongly for several years, with rapid growth in oil consumption.  The U.S. economic cycle peaked in December 2007, though that was not evident until about a year afterwards, and oil prices continued rising for another seven months.  Yields on short-term U.S. Treasury notes peaked around June 2007 and U.S. equity markets hit their pinnacle in October 2007.  Most of the other major industrial economies tipped into recession in the second half of 2007 or the first half of 2008.  In the oil market, persistent concerns about demand destruction were raised, but dismissed by many participants, and validated only after prices peaked.  The introduction of new low-Sulphur standards for distillate fuel oil in the United States led to concerns about the availability of enough sweet crude.  There were mounting concerns about the exhaustion of OPEC’s spare capacity and the organization’s ability to add more medium-sweet barrels to meet demand from refiners.

OPEC STAYS ON SIDELINE

Throughout 2007 and early 2008, OPEC leaders continued to insist the oil market was adequately supplied and they would make additional barrels available if refiners requested them.  But the Brent market moved into a sharp backwardation in the second half of 2007 and the first four months of 2008, indicating traders were concerned about oil availability.  In September 2007, OPEC agreed to increase its collective production by 500,000 barrels per day from the start of November, citing the tightness in U.S. fuel markets and the shift in crude futures into backwardation.  In December 2007, however, OPEC’s conference judged the market remained well supplied and that crude and product stocks were at comfortable levels and decided not to increase output further.  In March 2008, the conference continued to judge the market well supplied, noting growing downside risks in the world economy, and blamed the continued rise in oil prices on non-fundamental factors, especially speculators.  In May, the organization’s secretary-general issued a statement saying “there is clearly no shortage of oil in the market” and blaming speculative funds for the increasing volatility in crude oil.  The organization promised to be proactive in monitoring developments and act if necessary to ensure a stable and balanced market but did not promise additional barrels.  Prices continued to accelerate higher and became increasingly volatile, with $5-per-day price moves becoming frequent, and many traders pulling back from making markets due to the increase in risk.  OPEC insisted throughout that oil supplies were adequate, Saudi Arabia and other members would provide more oil, if refiners asked, but that prices were being driven by non-fundamental factors.  Eventually, the backwardation began to break down in May and spot prices started to fall from early July as the financial and economic outlook deteriorated.  With the intensification of the financial crisis in September 2008, the global economy headed deeper into recession through the second half of the year and in the first half of 2009.

WILL HISTORY REPEAT?

Could the same sequence of events play out in 2018/19?  The U.S. economy and financial markets are again at a relatively late stage in the current cyclical expansion.  In the rest of the world, the global outlook is softening, with the balance of risks tilted towards the downside, according to many forecasters.  Oil consumption growth has been strong but may be starting to soften, though as usual this will not be certain until after the event.  Six-month Brent calendar spreads are trading in a backwardation of around $2 per barrel, which is comparable to the corresponding point in September 2007.  New pollution regulations will tighten Sulphur specifications for marine fuels from the start of 2020, which will put pressure on the availability of medium-density and sweet crudes.  There are reported shortages of medium crudes as imminent sanctions reduce the export of medium-density oil from Iran (“Saudi Arabia worries oil crunch could push up prices”, Wall Street Journal”, Sept. 21).  Saudi Arabia says it has enough spare capacity to increase production by another 1.5 million barrels per day but some market participants are skeptical about the amount and the quality.   The Joint Ministerial Monitoring Committee of OPEC and non-OPEC producers concluded on Sunday the overall balance between supply and demand remains healthy.  But hedge funds have amassed a large bullish position in Brent crude, amounting to almost 470 million barrels, betting prices will head even higher.

U.S.-China trade war poses oil demand shock in 2019 – BP – Reuters News

U.S. sanctions on Iran will tighten global oil supplies sharply until the end of the year, but a threat to world demand looms in 2019 from the U.S.-China trade war, the head of BP’s oil trading in Asia said.  "We’re moving into the tightest part of 2018 … the re-imposition of Iran sanctions is the main factor as the market will tighten substantially from now to year-end," Janet Kong, chief executive of Integrated Supply and Trading Eastern Hemisphere at BP told Reuters.  Saudi Arabia and Russia won’t add significantly more oil to the market because of a lack of capacity, a top Iranian official said on Monday, predicting prices will probably rise further.  Sanctions on Venezuela are also exacerbating a production decline there, while outages in Nigeria and Libya have further crimped supplies, Kong said, with Brent LCOc1 supported at above $80 a barrel.  "The market fundamentals in the short term look very bullish and positive due to supply shocks, but over time, when supply catches up and the shock to demand becomes more evident, the market will go through another round of re-balancing next year," she said.  The world’s two largest economies, China and the United States, have imposed tariffs on each other’s imports in an escalating trade war that has rattled global markets and raised concerns of a slowdown in world economies and commodities demand next year.  "Going into 2019, I worry about the impact of the U.S.-China trade war, manifesting itself slowly," Kong said.  "The trade war impact has not really shown up in the data anywhere, but it will show up gradually over time. So the supply shock is very sharp and prompt, while the impact from trade war is boiling over slowly."  Analysts and the International Monetary Fund have forecast a 0.5 percent to 1 percent drop in world gross domestic product growth next year, she said.  The International Energy Agency said in its monthly oil report that global oil demand is set to to top 100 million bpd next year, although emerging market crises and trade disputes could dent this figure.  "The Trump administration wants intellectual property protection … reducing subsidies to Chinese SOEs (state-owned enterprises) and open market access by all businesses which are difficult, in my view, for the Chinese government to agree to," Kong said.

"So it’s very likely this war will drag on for a long time."

Vitol to halt business with Iran after U.S. sanctions start- executive – Reuters News

India’s oil demand to climb to 500 mln tonnes per year by 2040 -Indian Oil – Reuters News

 China Shandong refiners’ oil imports in H1 2018 rise 41 pct from year earlier – oil exec – Reuters News

• Independent refiners in China’s Shandong province imported 42.4 million tonnes of crude in the first half of 2018, 41.4 percent higher that a year earlier, a senior refinery executive said on Tuesday
• The group of refiners, also known as teapots, processed 39.14 million tonnes crude in the first half of 2018, up 53.4 percent from a year earlier, said Zhang Liu Cheng, general manager of the Shandong Refiners & Energy Group at the Asia Pacific Petroleum Conference (APPEC)
• But the group faces challenges as new and more competitive refining complexes are coming online while rising taxes and liquidity crunch have hurt profits, he said
• He added that China’s crude processing capacity is expected to reach 808 million tonnes in 2018, 35 million tonnes higher than in 2017

Asia’s oil deficit to widen by 2025 – Total – Reuters News

Asia’s oil deficit will widen to 35 million barrels per day (bpd) by 2025, up about 30 percent from the current 27 million bpd, amplifying global trade flow imbalances, a senior executive at French oil and energy group Total said on Tuesday.  At the same time, Europe’s imports will be cut by 10 million bpd, while exports from North America and the Middle East will increase, said Thomas Waymel, the company’s president of trading and shipping.  The United States will export shale oil, but its refineries will continue to import medium and heavy sour grades, Waymel said during the Asia Pacific Petroleum Conference (APPEC) in Singapore.  Regulatory changes like IMO 2020, which will cap sulphur content in ship fuel, will be another driver for growth and changing trade flows, he said.  "The fuel oil flows will be reduced. At the same time, the shipping industry will need distillates … so Europe and Singapore will attract more distillates," Waymel said.  New trade flows might emerge for high sulphur fuel oil either in coker capacity or power plants switching back from coal or gas to high sulphur fuel oil.  Light sweet crude will be more in demand, while heavy sour grades will need to be processed by complex refineries, he said.  "Regulatory changes will dramatically affect an increase in flows of both crude and products. It should also have positive impact on freight rates which is finally good news for ship owners," he said.

Pemex August Crude Exports Rise 2.2% to 1.18M B/D: Co. Data

The Mexican state-owned oil company’s Aug. crude production fell 1.3% m/m to 1.82m b/d, according to data from Pemex’s website.

Aug. production by type in b/d:

Heavy: -0.84% m/m to 1.06m b/d

Light: +12% m/m to 629k

Ultra-light: -38% m/m to 130k

Aug. crude exports by destination in b/d:

Americas: +0.76% m/m to 798k

Asia: +23% m/m to 254k

Europe: -18% m/m to 129k

Aug. exports by grade in b/d:

Maya, Altamira and Talam: +2.2% m/m to 1.18m b/d

Isthmus: unchanged at zero

Olmeca: unchanged at zero

Gasoline production: +7.5% m/m to 228.7k b/d

Gasoline imports: -12% m/m to 547k b/d

Colombia Studying Mexico-Style Oil Hedging

Colombia looking at mechanisms of the type Mexico has used for years, Finance Minister Alberto Carrasquilla tells lawmakers in Bogota.

“We are studying the way to cover, that is to say to see at what price the oil market should be willing to buy the oil both that Ecopetrol and others produce. There are countries like Mexico that have been doing this for 17 years.”

“We have started the work to see in what circumstances we could discuss this theme in the next phase of our budget debate.”

Asks for time to see what can realistically be achieved in the futures market

Estimated oil price of $67 per barrel in 2019 budget “seems low”

Colombia has ways to smooth out the necessary spending adjustments

U.S. Crude Oil Exports Seen Rising to 5M B/D by 2025: Total

U.S. crude oil exports seen at 2m b/d in 2018, Thomas Waymel, president of trading and shipping at Total, says at Asia Pacific Petroleum Conference in Singapore on Tuesday.

• U.S. crude exports and imports forecast to total 14m b/d by 2025 from 10m b/d this year
• Quality mismatch and cheap cost of transportation is another reason for driving trade flows

• Regulatory changes such as IMO 2020 are going to be the main driver in coming months

• Fuel oil flows to major bunkering hubs in Europe and Singapore will decrease amid IMO 2020

• Full impact will depend on scrubber penetration; shipping industry will need more distillates and Europe and Singapore will attract more distillates
• Positive impact seen on freight rates; new crude flows will emerge, with light and sweet crudes seeing higher demand

Canada heavy crude discount hits widest level on record – Reuters News

The Canadian heavy oil differential closed at its widest point on record against the West Texas Intermediate (WTI) benchmark on Monday in thin trade, as transportation constraints continued to weigh.  Western Canada Select (WCS) heavy blend crude for October delivery in Hardisty, Alberta, settled at $42.00 a barrel below the WTI benchmark crude futures CLc1, compared with Friday’s settle of $41.00, according to Shorcan Energy brokers.  Higher production compared with the second quarter has swelled volumes in storage and put pressure on prices, while tight pipeline space and insufficient rail capacity have pushed the differential even wider, say analysts.  Some of the recent price weakness can be attributed to leftover barrels stranded by Canada’s pipeline apportionment system, where shippers nominate a certain volume of barrels but see their shipments reduced if lines are oversubscribed.  "Often what we see post-apportionment is simply weak pricing in the aftermarket," said Matt Murphy, an energy analyst with Tudor, Pickering, Holt & Co.  Murphy noted that rail volumes continue to rise, but still appear to be insufficient to clear the market.  A jump in the global benchmark for crude also weighed on the Canadian prices, with Brent rising 3 percent to a four-year high above $80 a barrel after Saudi Arabia and Russia ruled out any immediate increase in production.  The transportation constraints mean Canadian producers are not able to get their barrels to market, leaving them unable to fully benefit from rising benchmark prices.  Monday’s WCS close surpasses a previous record discount of $41.50 reached in November 2013.  Light synthetic crude from the oil sands for October delivery settled at $17.75 under WTI, recovering slightly compared with Friday’s settle of $18.90 under.

U.S. Cash Crude-Grades firm on second day of rebalancing – Reuters News

U.S. cash crude grades mostly rose on Monday as traders rebalanced positions for a second day and as U.S. crude’s discount to Brent widened.  Traders rebalanced positions on the second day of cash roll trading, after the October futures contract expired on Thursday. The October/November roll traded between +$0.95 and +$1.20. The three-day cash roll window ends Tuesday.  U.S. crude’s discount to Brentwidened by $1.10 to minus $9.12 per barrel, supporting coastal crude differentials. Export demand for coastal grades typically rises when U.S. crude trades at a bigger discount compared with Brent.  The spread widened as Brent crude jumped more than 3 percent on Monday to a four-year high above $80 a barrel after Saudi Arabia and Russia ruled out any immediate increase in production.  Light Louisiana Sweet strengthened slightly to trade at a $5.85 and $6.80 per barrel premium to U.S. crude futures. West Texas Intermediate at East Houston WTC-WTM, also known as MEH, climbed by more than 60 cents to trade at a midpoint of about of a $6.25 per barrel premium to futures.  U.S. grades have become increasingly popular among Asian buyers as the discount has emerged.  CME Group Inc CME.O on Monday joined the race to provide oil traders with a futures contract deliverable in the U.S. Gulf Coast, as crude exports have surged since the lifting of a decades-old ban in late 2015.  Inland grades also strengthened. West Texas Intermediate at Midland WTC-WTM rose to as little as a $10 per barrel discount to U.S. crude.  Meanwhile, inventories at Cushing rose by about 530,000 barrels in the week to Sept. 21, according to market intelligence firm Genscape.

Light Louisiana Sweet WTC-LLS for October delivery rose 5 cents to a midpoint of $6.3 and traded between a $5.75 and $6.85 a barrel premium to U.S. crude futures.

Mars Sour WTC-MRS rose 95 cents to a midpoint of $4 and traded between a $3.75 and $4.25 a barrel premium to U.S. crude futures.

WTI Midland WTC-WTM rose $1 to a midpoint of $10.50 a barrel discount and traded between a $11 and $10 a barrel discount to U.S. crude futures.

West Texas Sour WTC-WTS rose $2.75 and was seen bid and offered between a $11.50 and $10.50 a barrel discount to U.S. crude futures.

WTI at East Houston, also known as MEH, traded at $6, $6.10 and $6.20 a barrel over WTI.

U.S. Cash Products-Group Three gasoline falls after hitting 3-yr high last week – Reuters News

U.S. Group Three gasoline cash differentials fell on Monday as the product traded against the November futures contract on the New York Mercantile Exchange, market participants said.  Group Three gasoline lost 3.00 cents a gallon to trade at 12.75 cents per gallon above the NYMEX gasoline futures benchmark RBc1, traders said.  The product has come off slightly from a nearly three-year high reached last week.  Elsewhere in the Midwest, Chicago ultra-low-sulfur diesel fell 2.50 cents a gallon to trade at 2.25 cents per gallon below the heating oil futures contract.  In the Gulf Coast, 54-grade jet fuel lost a quarter of a penny to trade at 7.75 cents per gallon below futures as the product traded on Colonial Pipeline’s 55th cycle for delivery to New York Harbor, market participants said.  A3 CBOB gasoline gained a quarter of a cent to trade at 1.75 cents per gallon below futures.  In New York Harbor, M2 conventional gasoline rose a quarter of a penny to trade at 6.75 cents per gallon above futures, traders said.  The RBOB futures contract on NYMEX gained 3.76 cents to settle at $2.0547 a gallon on Monday. NYMEX ultra-low-sulfur diesel futures rose 5.99 cents to settle at $2.2859 a gallon.  Renewable fuel (D6) credits for 2018 were trading at 14 cents each, slightly lower than between 14 and 16 cents on Friday traders said.  Biomass-based (D4) credits fetched 35 cents each, little changed from Friday, the traders said.

Philadelphia-area crude rail terminal reawakened by discounted crude – Reuters News

NEW YORK, Sept 25 (Reuters) – A rail terminal outside of Philadelphia has begun taking deliveries of Bakken crude after going dormant for nearly three years, according to shipping data and a source familiar with operations, as refiners snatch up discounted North American crude barrels.  The 90,000 barrel-per-day-rail terminal in Eddystone, Pennsylvania, has been getting routine deliveries of Bakken crude for the past month, the first significant deliveries since the site went dark in January 2016. Monroe Energy, a subsidiary of Delta Air Lines Inc DAL.N, is using the terminal to help supply its 185,000 bpd refinery in Trainer, Pennsylvania.  The return of crude deliveries at Eddystone highlights the growing pains confronting U.S. producers who are facing bottlenecks as booming production outpaces pipeline growth. It also shows how U.S. refiners are trying to seize on the bottlenecks, doing whatever they can to access the distressed crude.  The Eddystone rail terminal was one of several facilities built on the U.S. East Coast in the early part of this decade to take advantage of discounted crude out of North Dakota. But business at this terminal and others slumped as the discount vanished and cheap imports came into favor.  North Dakota oil production hit a record 1.3 million barrels per day in July, outpacing pipeline capacity, forcing producers to discount crude and making it attractive for coastal buyers.  The Dakota Access Pipeline, the key artery out of North Dakota, was nearly 100 percent full in August, according to energy industry intelligence service Genscape. Flows on the line, which runs from North Dakota to Illinois, are averaging just over 500,000 bpd, and further expansion is expected.  U.S. crude’s discount to global benchmark Brent rose to more than $10 a barrel this month, the widest in three months and near the biggest discount in over three years.  That spread is key for East Coast refiners, since the Bakken grade is priced off U.S. crude while import grades are typically priced off Brent. But other factors such as full pipelines have also contributed to the pickup in crude by rail, traders said.  Rail volumes from North Dakota to the East Coast hit nearly 75,000 bpd in June, according to the latest federal data, up from near zero volumes in August and September of last year. At the height of the boom, more than 450,000 bpd ran from the Bakken to the East Coast.  The activity could persist as long as the discounts for Bakken crude remain, according to traders and analysts. Brent crude’s premium to Bakken has been between $10 and $11 for November, traders said. It is expected to average around $7 a barrel in 2019, according to Morgan Stanley.  Delta Air Lines used the Eddystone terminal to supply the refinery from 2013 until the contract collapsed in 2016. It is unclear whether the new deliveries are part of a new supply contract or represent spot purchases.  The terminal is owned by Canopy Prospecting, which bought out its partner, Enbridge Inc, last year. Jack Galloway, one of the partners at Canopy, declined comment when reached by phone on Friday.  Monroe Energy did not respond to comment for this story.

No delays to implementing shipping fuel sulphur cap in 2020 -IMO official – Reuters News

The International Maritime Organization (IMO) will not delay implementing a reduction in the amount of sulphur in marine fuel in 2020, an IMO official said on Tuesday.  "I can categorically say there will not be a delay," said Edmund Hughes, the head of air pollution and energy efficiency at the IMO, during the Asia Pacific Petroleum Conference (APPEC) in Singapore.  IMO, the United Nations’ shipping agency, will require that vessels start in 2020 using fuel oil with 0.5 percent sulphur, down from 3.5 percent currently.  The IMO regulations imposed will create a level playing field for the global shipping industry and if it were to back down, it could lead different rules being implemented in different regions, creating greater levels of uncertainty for the global industry, argued Hughes.  "A delay to the regulation would damage the IMO’s reputation and credibility as a rule-making body for international shipping and would lead to more regional and national action to control air pollution from ships," said Hughes.  The shipping and oil refining industries are scrambling to prepare for the shift and have made large investments to comply with the new standards since they were announced in 2016.  But some shippers have been slow to respond and have argued that the burden of compliance with the IMO’s stricter fuel standards should rest with refiners to produce lower sulphur fuels that meet the new standards.  "(This) is a shipping regulation and its amazing how many times I’ve heard this is a refining problem," said Savvas Manousos, global head of trading at Maersk Oil Trading, at the conference.  "The onus of compliance is on the shipping industry, not on the refining industry," said Manousos, adding that the two industries must work together to address the global issue.  Maersk Oil Trading purchases marine fuel for its parent company A.P. Moller-Maersk and is among the biggest ship fuel buyers in the world.

Jonathan Wagner

Ion Energy Group

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Direct: 212-709-2261

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Wagner.j@ionenergygroup.com