World might be needing huge storage spaces to cope-up with the "Oil-Not-Required" situation.
The global oil industry may increasingly look to offshore oil tankers to store their extra crude oil, but for this to be economic it would require oil prices to fall further.
Earlier this month, oil data analytics firm OilX warned that oil in storage around the world could reach 1 billion barrels before long. This week, Reuters quoted shipping industry sources as saying that as much as 80 million barrels of oil are hanging out in floating storage. OilX has calculated that this oil in floating storage could be even more, at some 100 million barrels.
And the number is only going to grow.
Earlier this week, Bloomberg quoted three sources from the Energy Department as saying the department was discussing whether to start renting out federal storage space to local oil producers as their tanks were filling up and there were no quick buyers for the oil they pump.
In theory, it would take few months to fill the world’s remaining oil stores, but constraints at many facilities will shorten this window to only a couple of months.
“At the current storage filling rate, prices are destined to follow the same fate as they did in 1998, when Brent fell to an all-time low of less than $10 per barrel,” said Rystad Energy analyst Paola Rodriguez-Masiu.
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