Residual fuel oil is a heavy petroleum product remaining after lighter fractions are removed during crude oil refining. Also known as bunker fuel or heavy fuel oil, this product is primarily used for power generation, marine fuel, and industrial heating applications. Residual fuel oil quality and pricing are influenced by sulfur content and viscosity specifications.

Environmental regulations increasingly restrict high-sulfur residual fuel oil use, creating market shifts toward cleaner alternatives and affecting refinery economics. The International Maritime Organization’s sulfur regulations have particularly impacted marine fuel markets. Understanding residual fuel oil dynamics helps assess refining margins and environmental transition impacts.

Real-world example: IMO 2020 sulfur regulations reduce demand for high-sulfur residual fuel oil from $300 to $180 per ton as ships switch to compliant low-sulfur alternatives, forcing refiners to find alternative markets or upgrade facilities.