What is IMO 2020 and how did it affect heavy fuel oil?

IMO 2020 is the International Maritime Organization regulation that took effect on 1 January 2020, reducing the maximum sulphur content of marine bunker fuel globally from 3.5% to 0.5% (and to 0.1% in designated Emission Control Areas such as the North Sea, Baltic, and North American coastal zones). Traditional HFO has sulphur content of 1.5–3.5%. To comply, ships must either: (1) Switch to Very Low Sulphur Fuel Oil (VLSFO) — a 0.5% sulphur blend — or marine gasoil/MGO; (2) Install exhaust gas cleaning systems (scrubbers) that allow continued HFO use; (3) Switch to LNG or methanol as alternative fuels. IMO 2020 significantly restructured the marine fuel market, reducing HFO demand and increasing demand for distillate-based marine fuels.

Is heavy fuel oil still used in 2026?

Yes, but in reduced volumes and in different applications compared to pre-2020. In marine shipping, ships fitted with exhaust scrubbers (approximately 15–20% of the global fleet by 2026) continue to burn HFO — scrubbers allow ships to comply with IMO 2020 sulphur limits while using cheaper HFO. In power generation, HFO remains a significant fuel source in developing economies (Southeast Asia, Africa, the Caribbean) where it is used in electricity generation due to its low cost. In industrial applications, HFO is used in large boilers, cement kilns, and asphalt plants. European and OECD countries have largely phased out HFO from onshore uses due to air quality regulations.

Heavy Fuel Oil (HFO)

Q: What is heavy fuel oil (HFO)?

Heavy fuel oil (HFO) is the densest, most viscous fraction of crude oil that remains after lighter products (petrol, diesel, jet fuel, naphtha) have been distilled off. It is also called residual fuel oil, bunker fuel, or fuel oil. HFO must be heated to 50–150°C to flow, and its energy content (~40 MJ/kg) is lower than diesel (~43 MJ/kg). It is the cheapest refined product per tonne and has historically been the dominant marine bunker fuel — powering the vast majority of the world's ocean-going vessels because its low cost per unit of energy offsets its handling complexity at sea.

The densest, cheapest refined petroleum product — historically the backbone of marine bunker fuel and power generation, now being displaced by cleaner alternatives following IMO 2020.

Definition

Heavy fuel oil (HFO) — also called residual fuel oil, bunker C, or fuel oil — is the heaviest fraction of crude oil that remains after lighter products (naphtha, petrol/gasoline, jet fuel, kerosene, diesel/gasoil) have been removed by atmospheric and vacuum distillation. It is the refinery's "bottom of the barrel" — the viscous, dark residue that requires heating to flow.

HFO is characterised by:

High viscosity: Must be heated to 50–150°C to flow and atomise for combustion
High density: ~0.94–1.03 kg/litre vs diesel at 0.82–0.85 kg/litre
High sulphur content: Traditional HFO (HSFO) contains 1.5–3.5% sulphur by weight
Lower energy density per kg: ~40 MJ/kg vs diesel's ~43 MJ/kg
Low cost: The cheapest refined product — typically priced at a significant discount to crude oil on a per-tonne basis

HFO product grades

Grade	Viscosity (cSt at 50°C)	Sulphur (%)	Primary use
IFO 180	180 cSt	Up to 3.5% (HS) or 0.5% (LS)	Smaller ships; coastal vessels
IFO 380 (HSFO)	380 cSt	Up to 3.5%	Large ocean-going vessels (pre-IMO 2020, or with scrubbers)
VLSFO (Very Low Sulphur)	~150–380 cSt	≤0.5%	Marine compliance fuel post-IMO 2020 (no scrubber)
ULSFO (Ultra Low Sulphur)	~150 cSt	≤0.1%	Emission Control Area (ECA) compliance
Marine Gas Oil (MGO)	~2–11 cSt	≤0.1%	Small vessels; ECA compliance; heating fuel

IMO 2020 and the transformation of the bunker market

The International Maritime Organization's global sulphur cap (IMO 2020) took effect on 1 January 2020, cutting the maximum sulphur content of marine bunker fuel from 3.5% to 0.5% globally. This was the most significant structural shift in the marine fuel market in decades.

Ships had three compliance options:

Switch fuels: Use VLSFO (0.5% sulphur blend) or MGO instead of HSFO. The majority of the fleet adopted this approach.
Install scrubbers: Exhaust gas cleaning systems (EGCS/scrubbers) clean HFO exhaust to meet the 0.5% equivalent limit, allowing continued HFO use. Approximately 4,000–5,000 ships installed scrubbers by 2023, roughly 15% of the global fleet by gross tonnage.
Alternative fuels: LNG-powered ships avoid sulphur entirely. LNG vessels represent a small but growing share of new builds. See our LNG glossary entry.

IMO 2020's impact on fuel prices: the spread between HSFO and VLSFO/MGO widened significantly in 2019–2020 as the market repositioned. Refiners upgraded facilities to convert more HFO into compliant marine fuels. The distillate market (diesel/gasoil) was initially tightened by competition from marine demand for gasoil-based VLSFO blends, contributing to the high distillate crack spreads seen in 2021–2023.

For how marine fuel demand affects diesel prices, see our diesel price outlook 2027. For naphtha — the lightest refinery stream at the opposite end from HFO — see our naphtha glossary entry.

HFO in power generation

Despite its retreat from marine markets, HFO remains an important power generation fuel in developing economies. It is burned in reciprocating engine power plants and steam turbine plants in:

Small island states (Caribbean, Pacific, Indian Ocean) where fuel oil is the established generation technology
Sub-Saharan African countries where grid power is supplemented by HFO peaker plants
Southeast Asian industrial users and utilities

HFO power generation is declining as solar PV costs have fallen below HFO generation cost in most markets and as air quality regulations tighten. For the fuel price context in these markets, see our Southeast Asia fuel subsidies 2026 and Nigeria fuel market analysis.

What is heavy fuel oil and what does HFO mean?

What is heavy fuel oil? HFO meaning in the energy industry is the thickest, cheapest residual fraction left after lighter products (petrol, diesel, jet fuel, naphtha) have been distilled from crude oil. Also called residual fuel oil, bunker C, or simply fuel oil, HFO must be heated to 50-150 degrees C to flow. It has historically been the dominant fuel for ocean-going ships because its low cost per tonne outweighs the complexity of handling a viscous, high-sulphur product at sea. The U.S. EIA residual fuel oil page tracks production and consumption trends, while the IEA oil technology overview places HFO within the broader refined product slate.

Since the IMO 2020 sulphur cap, HFO demand in the marine sector has declined significantly — only ships equipped with exhaust gas scrubbers (roughly 15-20% of the global fleet) can still legally burn high-sulphur HFO on the open ocean. The remainder have switched to VLSFO or MGO. On land, HFO remains important for power generation in developing economies, particularly island nations and parts of Sub-Saharan Africa, though solar PV is increasingly displacing it as generation costs fall. The OPEC Annual Statistical Bulletin provides global fuel oil demand data by region.

Frequently asked questions

What is heavy fuel oil (HFO)? Heavy fuel oil is the dense, viscous residue left after lighter refinery fractions (petrol, diesel, jet fuel, naphtha) have been distilled from crude oil. It must be heated to flow, contains high sulphur (1.5–3.5% in traditional grades), and is the cheapest refined product per tonne. It was the dominant global marine bunker fuel before IMO 2020's sulphur regulations restructured the market.: Heavy fuel oil is the dense, viscous residue left after lighter refinery fractions (petrol, diesel, jet fuel, naphtha) have been distilled from crude oil. It must be heated to flow, contains high sulphur (1.5–3.5% in traditional grades), and is the cheapest refined product per tonne. It was the dominant global marine bunker fuel before IMO 2020's sulphur regulations restructured the market.
What is IMO 2020 and how did it affect heavy fuel oil? IMO 2020 cut the global marine sulphur limit from 3.5% to 0.5% from 1 January 2020. Ships responded by switching to low-sulphur VLSFO/MGO, installing exhaust scrubbers (allowing continued HFO use), or adopting LNG. The regulation dramatically reduced HSFO demand and widened the spread between cheap HFO and more expensive compliant fuels. The resulting switch to distillate-based marine fuels contributed to tighter diesel/gasoil markets and elevated crack spreads in 2021–2023.: IMO 2020 cut the global marine sulphur limit from 3.5% to 0.5% from 1 January 2020. Ships responded by switching to low-sulphur VLSFO/MGO, installing exhaust scrubbers (allowing continued HFO use), or adopting LNG. The regulation dramatically reduced HSFO demand and widened the spread between cheap HFO and more expensive compliant fuels. The resulting switch to distillate-based marine fuels contributed to tighter diesel/gasoil markets and elevated crack spreads in 2021–2023.
Is heavy fuel oil still used in 2026? Yes. Ships with scrubbers (~15% of global fleet by tonnage) continue to burn HSFO. HFO remains important for power generation in developing economies (Caribbean island states, sub-Saharan Africa, Southeast Asia) and industrial uses (cement kilns, large boilers). European and OECD markets have largely phased it out from onshore use due to air quality regulations. HFO's share of marine bunkers has declined from ~75% (pre-2020) to approximately 30–40% post-IMO 2020.: Yes. Ships with scrubbers (~15% of global fleet by tonnage) continue to burn HSFO. HFO remains important for power generation in developing economies (Caribbean island states, sub-Saharan Africa, Southeast Asia) and industrial uses (cement kilns, large boilers). European and OECD markets have largely phased it out from onshore use due to air quality regulations. HFO's share of marine bunkers has declined from ~75% (pre-2020) to approximately 30–40% post-IMO 2020.