The volumes of oil in transit at sea continue to increase to multi-year highs as supply grows from both OPEC+ and non-OPEC+ exporters, and more long-haul voyages from the Atlantic to the Pacific basin are being made due to favorable arbitrage economics.
This massive supply buildup has helped push prices down, with WTI crude falling to $56.84 (-1.22%) and Brent crude dropping to $60.55 (-1.26%). As many as 1.24 billion barrels of crude and condensate were in transit on tankers in the week to October 17, per data from energy flows analytics firm Vortexa cited by Bloomberg.
As many as 1.24 billion barrels of crude and condensate were in transit on tankers in the week to October 17, per data from energy flows analytics firm Vortexa cited by Bloomberg.
The weekly oil in transit volumes rose from an estimated 1.22 billion barrels during the previous week and exclude oil in floating storage—crude and condensate held in tankers at sea that haven’t moved for at least seven days.
The highest oil in transit volumes since the Saudi-Russia price war in the early days of the pandemic in 2020 have been accumulating in recent weeks amid a surge in OPEC+ exports and a jump in supply from the Americas, most notably the United States, Guyana, and Brazil.
Part of the build-up is due to the longer voyages from South and North America to the Pacific region, after a narrowing Brent-Dubai EFS spread in late August and early September prompted extensive long-haul voyages, Vortexa market analyst Xavier Tang said earlier this month.
“Although OPEC-8 crude and condensate exports have remained relatively stable from February to August this year, the unwinding of OPEC+ production cuts has now begun to show up in September, as export volumes have jumped to a 29-month high of 22mbd,” Tang said.
The increase in OPEC-8 exports could partly be a compensation effort after August’s low exports and a seasonal rise in the fourth quarter of the year, according to the Vortexa analyst.
Supply from the U.S., Guyana, and Brazil is also rising as all three countries ramp up production and exports. The average U.S. crude oil production rose to 13.636 million bpd last week, the highest point ever.
In South America, newly started projects offshore Guyana are boosting Guyanese supply, too.
The rise in global supply and the period of weaker seasonal demand are set to build a large glut on the market later this year and early next year, which could sink oil prices to $50 per barrel, especially as geopolitical concern abate, some analysts reckon.
