Will high-sulfur and low-sulfur fuel oil spreads diverge in 2025?

Will high-sulfur and low-sulfur fuel oil spreads diverge in 2025?
High and low-sulfur fundamentals are pulling in different directions. High-sulfur fuel oil shows a tight-supply, peak-demand pattern: shipments from the Persian Gulf and Russia keep falling, with Russian refineries still under attack and Middle East exports constrained by strait disruption. Summer power generation demand from Saudi Arabia and Egypt provides a floor. Low-sulfur, by contrast, faces a narrowing supply gap as Brazilian exports rise and domestic Chinese output holds near 1.2 million tons monthly, though gasoline season diverts blending components toward higher-value products. Analysts broadly expect the LU-FU spread to trade in a range, with geopolitical premium gradually priced out as supply recovers.