Fuel flows and floating storage: The new normal?

Oil analytics firm Vortexa shares its insights on the rapid expansion of global floating storage across the oil complex, and how oil flows are being reshaped in unexpected ways in the wake of the COVID-19 pandemic. GLOBAL markets in the first half of 2020 are oversupplied with oil products at levels not previously experienced by the industry. Transportation restrictions have forced refiners to reduce output, to adjust product yields and bring forward maintenance. The net result is a glut of historic proportions that has accumulated in onshore and offshore storage for both crude and refined oil products. In this low demand-high supply scenario, storage acts as a critical buffer in the supply chain. Diverting oil into storage can buy some time for demand to recover (and potentially avoid a costly refinery shutdown), for supply to fall further, or a new compromise of the two. Storage capacity, where large enough and in the right locations, can assist in balancing this supply-demand disconnect, but it has its limits. Those limits have been tested, especially at key oil storage hubs, where we see a rapid expansion of floating storage, that is, cargoes on board tankers stationary for...