barrels per day to roughly 1 million barrels per day due to the insufficient installed base of scrubbers. These volume changes are expected to result in upward pressure on diesel/distillate and VLSFO prices and downward pressure on HSFO prices, with major price dislocations possible as markets adjust. The market impacts of the IMO changes are expected to be most significant in 2020 and to fade in subsequent years. Growing scrubber installations and increasing VLSFO availability will reduce market disruption. However, the structural changes from IMO 2020 will result in long-term changes to refined product prices, with HSFO values remaining below the levels that would otherwise have existed. Lubricant and base oil markets will be affected by the change in fuel quality and secondary impacts on base oil refining economics. WHAT ARE THE IMPACTS ON LUBRICANTS AND BASE OILS? Lubricant and base oil markets will be affected by the change in fuel quality and secondary impacts on base oil refining economics. As vessels switch from HSFO to marine diesel/VLSFO consumption, marine lubricants will have to change to formulations compatible with lower-sulfur fuels, with the major change being the need for lubricants with lower base number (BN). As vessel owners adapt to changes in fuel properties from place to place, opportunities for new systems to optimize lubricant use and cost may arise. Base oil producers are expected to see more significant impacts from IMO 2020's effects on oil markets. Group I plants produce relatively high yields of heavy, higher-sulfur byproducts that will likely see lower values because of the IMO 2020 market impacts. As a result, Group I plants - particularly those processing sour crudes - are expected to see operating margins fall. In contrast, the market impacts are expected to improve the economics of most Group II and III facilities. These changes may accelerate the global trend to increase Group II and III production and use at the expense of Group I. Eskew is vice president of IHS Markit. He can be reached at blake.eskew@ihsmarkit.com. 19