Brazil has emerged as a global powerhouse in the crude market after production reached a record high last year of over 3 million barrels per day. Exports rose in tandem with production, climbing to average over 1mn bpd. The South American nation is now also supplementing its crude efforts via higher levels of fuel oil exports. Based on our assessment, the typical yield for Brazilian fuel oil is a sulfur content of around 0.7%, making it non-compliant in relation to IMO 2020 regulations. Brazilian refineries must accordingly blend its fuel oil with diesel to produce IMO-compliant fuels.
In the first nine months of 2019, Brazil maintained steady fuel oil exports of just over 100,000 bpd. That pace spiked in the final quarter of the year, rising to 169,000 bpd. There has also been a corresponding pop in Brazilian diesel imports, as refiners use it to blend fuel oil down to IMO-compliant levels. Over the last three months, Brazil imported some 231,000 bpd of diesel, low sulfur diesel and ultra-low sulfur diesel, up nearly a third on the average over the first nine months of 2019.
Singapore, one of the main bunker hubs in the world, imported some 48,000 bpd of Brazilian fuel oil on average in 2019. With IMO 2020 preparations beginning in earnest in the fourth quarter, Singapore’s imports of Brazilian fuel oil jumped to 58,000 bpd over the last three months of 2019.
As we move deeper into 2020, Brazil is expected to play a bigger role in the oil sector as production and exports rise. In terms of winners and losers of the IMO regulations, Brazil is definitely in the winning camp.