Southeast Asia’s oil demand will remain strong in 2018. National elections in a half-dozen Asian countries this year and next are prompting some governments, like Indonesia and Malaysia, to reintroduce fuel subsidies to quell inflation as oil prices rise. This should support demand growth in the short term, but a deceleration is likely by the first half of 2019.
Later this year, California regulators will vote whether to extend the state’s Low Carbon Fuel Standard(LCFS) from its current expiration in 2020 to 2030. If it passes, renewable diesel would be the biggest winner among biofuels. A shortage of renewable diesel in California would create a strong incentive for producers to build new capacity in the next decade, particularly in feedstock-rich Asia.