The race to store crude oil and, to a lesser extent, derived products at sea may soon slow down, if not come to a complete standstill. This was announced by the International Energy Agency. In its latest report the Agency explains how the cuts in oil production announced at the beginning of April and which came into force at the beginning of May will affect not only the price of oil, which has now fallen back below the psychological threshold of 30 dollars a barrel, but also the storage crisis.
Low productivity will in fact lead to a reasonable decrease in crude oil stocks in onshore storage facilities, making it less necessary to use ships as offshore “deposits”.
According to the IEA, the reduction of crude oil stocks at sea will become a common and widespread practice from the second half of the year onwards, in correspondence with the recovery in consumption of oil products worldwide, due obviously to the end of the lockdown measures imposed in many countries in the world to try to stem the spread of the coronavirus.
At the end of April, 86% of the tanker fleet was only used for floating storage. Shipowners in the sector have recorded profits that have sky-rocketed thanks to very high freight rates, which reached an all-time peak in mid-March.
High freight rates still allow tanker owners to earn $40,000 a day for the rental of a VLCC. Earnings that may soon deflate due to scheduled production cuts in May and June.
Translation by Giles Foster