The International Maritime Organization (IMO) has decided to delay the adoption of its Net Zero Framework (NZF) for another year — a move that adds uncertainty but also provides an opportunity for deeper review and refinement of the proposed mechanisms.

Ahead of the Marine Environment Protection Committee (MEPC) meeting, a comprehensive study by Rystad Energy’s maritime decarbonization experts revealed major gaps in the current framework that must be addressed to ensure a fair and sustainable energy transition for the global shipping sector.

The postponement gives member states additional time to refine ambiguous or contentious elements of the framework and produce a more robust and actionable plan.

The study highlighted a substantial gap between projected clean fuel supply and targeted demand, worsened by infrastructure limitations, raising doubts about the feasibility of the proposed transition timeline.

It also identified ongoing imbalances in the carbon trading mechanism, forecasting that demand for Tier II offset units will exceed available surplus units until 2035 — a structural deficit likely to push trading prices toward the Tier II penalty ceiling.

The report stressed the need for careful design of the reward mechanism to avoid turning it into a mere fine collection system. While cost gaps are expected to narrow as technology matures and economies of scale improve, an effective incentive structure remains essential to encourage sustainable practices. By addressing these key issues, the IMO can develop a more efficient and equitable framework to support a low-carbon future for the maritime sector.

Rystad Energy noted that decarbonizing shipping is a complex challenge that extends beyond the industry itself, being closely tied to the global shift from fossil fuels to renewable energy. The findings suggest that progress will likely be slower than IMO’s current projections due to infrastructure constraints, technological readiness, and the interconnected nature of energy systems.

While the industry has shown strong commitment, practical limitations call for a pragmatic approach. The IMO is expected to use the extra year to develop a more realistic and balanced framework.

Junlin Yu, Vice President of Supply Chain Research at Rystad Energy, said, “The IMO should use this additional year to craft a framework that is both practical and fair.”

The company recently published a detailed report on the financial structure of maritime decarbonization under the Net Zero Framework, available on its official website.

The analysis was based on an extensive database covering conventional fuels, hydrogen derivatives, and biofuels, alongside a global review of alternative-fuel fleets, port infrastructure, and shipyard capabilities.

Under the NZF, vessels that meet emissions targets generate Surplus Units (SUs), while non-compliant vessels generate Rectification Units (RUs), classified into:

Tier I (RU1s): for vessels meeting minimum targets.

Tier II (RU2s): for vessels failing to meet required targets.

Non-compliant vessels can offset Tier II rectification units by purchasing surplus units from compliant ones.

Rystad’s projections show a complex interaction between surplus and rectification units. Surplus units are expected to start at 40 million tonnes of CO₂ equivalent in 2028, rising to 53 million by 2035, while RU2s could soar from 47 million to 234 million tonnes annually by 2035.

This imbalance will dictate market pricing, with Rystad forecasting that RU2 demand will remain above available surplus supply until 2035 — likely pushing trading prices toward the Tier II penalty cap.

According to the company’s analysis, surplus unit prices will be driven more by market dynamics than by biofuel price differentials.

Given the limited supply of advanced biofuels for shipping, surplus unit prices are projected to approach the penalty ceiling of $380 per tonne of CO₂ equivalent after transaction costs.

Yu added, “While surplus units will offset much of the Tier II penalties until 2030, this may also limit financial incentives for early adopters of zero-emission technologies.”

A structural shift is expected in 2031, as surplus units decline and compliance requirements tighten, increasing emission deficits among shipping companies. This will result in higher penalty revenues, strengthening the NZF Fund’s ability to finance industry-wide decarbonization efforts.

The study also highlighted design challenges in the framework — notably the two-year holding limit on surplus units, intended to prevent dilution of future emission-reduction efforts. However, this restriction could discourage early adoption of clean technologies, unlike the EU’s FuelEU Maritime regulation, which allows permanent storage of units.

Financial forecasts show that the IMO’s Net Zero Fund could grow significantly, with Tier I and Tier II penalties expected to generate around $13 billion in 2028 and nearly $79 billion by 2035.

Still, the analysis questions whether the framework will effectively support the shift to zero-emission vessels, particularly in its initial stages.

Rystad estimates that the required reward levels to achieve cost parity between e-fuels and conventional fuels will initially be prohibitively high, leading to a financial shortfall until 2030 — even if the fund’s full resources are allocated to incentives.

Over time, however, technological advances and production scaling are expected to narrow this gap, ultimately producing a substantial fund surplus after 2030.

Palladium prices rose on Thursday amid a mildly positive performance by the US dollar against most major currencies and renewed optimism that trade tensions between the United States and China are easing — a development that could boost demand.

According to Capital.com, palladium has gained around 26% since the start of October, reaching roughly $1,500 per ounce. The surge has coincided with gains in platinum and a general loosening of global financial conditions.

Bets on US interest rate cuts and a softer dollar have also fueled the metal’s rise as part of the broader “Gold + Liquidity” wave that has lifted precious metals across the board.

Palladium is used almost exclusively in catalytic converters for gasoline engines, meaning that US automakers and electronics manufacturers could face significant cost fluctuations.

Technical analysis from Monex indicates resistance between $1,500 and $1,520 per ounce, with expectations for a continued upward trend but volatile trading ahead.

Analysts at CPM Group noted that palladium’s recent strength is “closely tied to platinum’s performance,” while warning that a weakening US labor market and persistent inflation could limit demand growth.

Meanwhile, the US Dollar Index was slightly higher by less than 0.1% at 98.9 points as of 14:39 GMT, after hitting a high of 99.1 and a low of 98.9.

At 14:41 GMT, December palladium futures were up 2.8% at $1,501.5 per ounce.

Bitcoin rose more than 2% over the past 24 hours, climbing back above $109,500 as traders positioned themselves ahead of Friday’s release of the US Consumer Price Index (CPI) — the week’s most closely watched economic event.

With most official economic data on hold due to the ongoing US government shutdown, investors expect the upcoming inflation report to be the only major indicator guiding markets this week.

Analysts at QCP Capital wrote in a Thursday report: “The only data point that really matters this week is Friday’s CPI, as it will be the sole reading the Federal Reserve sees before resuming its policy communications.”

The firm added that a softer-than-expected inflation reading could reinforce the “soft landing” narrative for the US economy and provide fresh momentum for Bitcoin prices.

“A 0.2% reading would support that narrative and keep Bitcoin’s upward trend intact,” the report said, noting that gold (GC=F) posted its biggest one-day drop since 2020 as the US dollar strengthened, while Bitcoin briefly spiked to $114,000 before pulling back.

Geopolitical Tensions Dominate, but Trade Talks Offer Hope

Despite persistent geopolitical tensions weighing on global risk appetite, reports of potential trade talks between Chinese President Xi Jinping and US President Donald Trump brought some relief to markets.

The two leaders are expected to meet on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea later this month, in a meeting investors hope could ease trade and security frictions in the region.

Diverging Views on Bitcoin’s Path

Bitcoin has declined since reaching a record high above $126,270 on October 6, 2025.

John Glover, Chief Investment Officer at Ledn, believes the rally is over.

“The Bitcoin bull run is done!” he told Yahoo Finance UK. “I think we’ve completed the five-wave advance and are now entering a bear market that could last through the end of 2026.”

Glover added that while a retest of $124,000 is possible, he expects prices to trade lower overall in the coming months.

“I’m looking for a major correction into the $70,000–$80,000 range — perhaps even lower — and the final target will become clearer as prices evolve over the next few months.”

Institutional Demand Could Fuel Renewed Optimism

On the other hand, Matt Hougan, Chief Investment Officer at Bitwise, said Bitcoin could see another leg higher if short-term selling pressure eases.

“If current sellers step back, allowing institutional demand to play a larger role, Bitcoin could mirror gold’s 2025 rally,” Hougan wrote in a research note this week.

He pointed out that gold has gained roughly 57% in 2025, driven by surging central bank purchases that have more than doubled since the outbreak of the Russia-Ukraine war — from around 467 tons annually to 1,080 tons, according to Metals Focus.

Hougan said this level of buying nearly matches demand from gold exchange-traded products (ETPs), which helps explain why gold has outperformed Bitcoin this year.

“If central banks are the main engine behind gold’s rally, it’s only natural that Bitcoin hasn’t risen at the same pace,” he added.

Despite strong demand from spot Bitcoin ETFs and institutional investors, Hougan believes cautious sentiment continues to limit gains: “Bitcoin hasn’t yet reached $200,000 despite robust inflows, because price-sensitive investors keep selling into every 10%–15% rally.”

Oil prices surged by 5% on Thursday after the United States imposed new sanctions on Russian energy giants Rosneft and Lukoil over the war in Ukraine, extending the gains recorded in the previous session.

Brent crude futures rose by $3.39, or 5.4%, to $65.98 a barrel at 10:18 GMT, while US West Texas Intermediate (WTI) gained $3.31, or 5.7%, to $61.81 a barrel.

Ole Hansen, an analyst at Saxo Bank, said the US sanctions mean that refineries in China and India — the largest buyers of Russian oil — will now have to seek alternative suppliers to avoid being cut off from the Western banking system.

Washington reaffirmed its readiness to take further action, urging Moscow to agree immediately to a ceasefire in Ukraine. The UK had already imposed sanctions on Rosneft and Lukoil last week, while the European Union approved its nineteenth sanctions package against Russia, which included a ban on imports of Russian liquefied natural gas (LNG).

Market Structure Shift and US Inventory Drop

The Brent crude forward curve shifted into backwardation, with the front-month contract trading $1.98 above the six-month delivery contract, reflecting tightening short-term supplies.

Following the announcement of US sanctions, Brent and WTI futures both jumped more than $2 a barrel, also supported by an unexpected drawdown in US crude inventories.

Giovanni Staunovo, an analyst at UBS, said the impact of the sanctions on oil markets depends largely on India’s response and whether Russia can find new buyers for its crude.

India has become the largest importer of discounted Russian oil since the start of the war in Ukraine, but private refiners are expected to sharply reduce purchases under the new sanctions, according to industry sources.

Sources added that Reliance Industries, India’s biggest buyer of Russian crude, plans to significantly scale back — or even halt — its Russian oil imports in the coming period.

Lingering Doubts Despite the Rally

Some analysts remain skeptical that the new sanctions will bring about a lasting shift in the oil market. Claudio Galimberti, an analyst at Rystad Energy, said: “So far, most of the sanctions imposed on Russia for more than three and a half years have failed to meaningfully curb its oil production or revenues.”

He added that concerns over potential oversupply — due to increased output from the OPEC+ alliance — continue to cap price gains, while UBS expects Brent to remain within a $60–70 per barrel trading range.

On the demand side, data from the US Energy Information Administration (EIA) on Wednesday showed that US crude, gasoline, and distillate inventories declined last week amid improved refinery activity and stronger domestic consumption.