Oil volumes transiting the sea continue to rise to multi-year highs as supply from both OPEC+ and non-OPEC+ exporters increases, and more long-distance voyages are made from the Atlantic to the Pacific basin due to favorable arbitrage economics. This huge increase in supply has contributed to lower prices, with WTI crude oil falling to $56.84 (-1.22%) and Brent crude oil falling to $60.55 (-1.26%). Up to 1.24 billion barrels of crude oil and condensate were in transit by tanker trucks in the week to October 17, according to data from energy flows analysis firm Vortexa cited by Bloomberg.
Up to 1.24 billion barrels of crude oil and condensate were in transit by tanker trucks in the week to October 17, according to data from energy flows analysis firm Vortexa cited by Bloomberg.
Weekly volumes of oil in transit rose from an estimated 1.22 billion barrels during the previous week and exclude oil in floating storage – crude oil and condensate held in tankers at sea that have not moved for at least seven days.
The largest volumes of oil in transit since the price war between Saudi Arabia and Russia in the early days of the pandemic in 2020 have been accumulating in recent weeks amid an increase in OPEC+ exports and an increase in supply from the Americas, especially from the United States, Guyana and Brazil.
Part of the increase is due to longer trips from South and North America to the Pacific region, after a narrowing of the Brent-Dubai EFS spread in late August and early September led to extensive long-haul trips, 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 removal of OPEC+ production cuts has begun to manifest in September, as export volumes have risen to a 29-month high of 22 mbd,” Tang said.
The increase in OPEC-8 exports could be partly a compensation effort after low exports in August and a seasonal increase in the fourth quarter of the year, according to the Vortexa analyst.
Supply from the United States, Guyana and Brazil is also increasing as all three countries increase production and exports. Average U.S. crude oil production rose to 13.636 million bpd last week, the highest point in history.
In South America, recently started projects off the coast of Guyana are also boosting Guyanese supply.
Rising global supply and a period of weaker seasonal demand will create a large glut in the market late this year and early next year, which could sink oil prices to $50 a barrel, especially as geopolitical concerns ease, some analysts estimate.