Since the end of August, roughly one billion barrels of oil have accumulated on tankers, with a disproportionately large share coming from sanctioned countries like Russia, Iran, and Venezuela—accounting for 20–40% of the increase, well above their share of global production, reports Alex Longley and Julian Lee of Bloomberg. The buildup reflects both higher output and difficulty finding buyers due to Western sanctions, with Russian shipments particularly affected by US restrictions on Rosneft and Lukoil, while India and China have been cautious in taking cargoes. Iranian exports have also surged despite US sanctions on Chinese terminals. At the same time, non-sanctioned oil from Saudi Arabia and the US has added to the glut, straining tanker capacity and briefly pushing shipping costs above $100,000 per day, highlighting how floating inventories and sanctions are shaping global oil trade and influencing near-term prices. They write:
A buildup of a billion barrels of oil on the world’s oceans includes a disproportionately large amount of crude from nations subject to some kind of sanctions — a sign the measures are bringing a degree of disruption to the oil trade.
Of the surge in oil on tankers since the end of August, as much as roughly 40% of the increase is barrels from Russia, Iran, Venezuela, or unclear origin, according to vessel-tracking data from Vortexa, Kpler and OilX. Even the lowest estimate, at about 20%, is a larger share of global crude production than the three nations have.
The buildup doesn’t mean the barrels will never sell, but it is a threat to the revenues of sanctioned petrostates, with further ramifications for a global oil market that’s forecast to be headed for oversupply. […]
The buildup in restricted oil is led by Russian supplies, according to a Bloomberg analysis of the data from the vessel-tracking firms. […]
But the barrels on water from nations subject to sanctions represent a larger part of the increase than their collective slice of global crude production of about 17%, according to OilX data.
“It’s clear that there is a lot of crude on the water now,” Brian Mandell, executive vice president of marketing and commercial at Phillips 66, said on an earnings call late last month. “We’re kind of waiting to see what those crudes are.”
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