- Oil on water hits highest level since 2020.
- Floating storage rises but far below pandemic peak.
- IEA warns surplus could reach 4 mbd next year.
Analysts are raising alarms about a growing oversupply as OPEC+ increases its quotas and robust production from the Americas further widens the supply-demand gap as we approach 2026. Factors like sanctions, economic trends, and the ongoing energy transition are adding layers of uncertainty to the mix, reports Gibson.
Oil on Water Reaches 2020 Levels
Crude and DPP in transit have surged to their highest levels since May 2020, while CPP volumes are on a downward trend due to autumn refinery maintenance.
Increase in Floating Storage
Floating storage has been on the rise throughout 2024, hitting a 2.5-year high, although it still sits at just 40% of the peak seen during the pandemic. High charter rates and backwardated futures are making storage less appealing economically.
Rising Inventories
According to IEA data, both land and sea inventories have increased by 1.15 mbd from January to September, with sanctioned barrels having a tough time finding buyers.
Potential Absorption by SPRs
The US Strategic Petroleum Reserve is currently 182 million barrels below pre-war levels, while China is ramping up its storage capacity through 2026.
2025–2026 Risk Scenario
Based on IEA projections, supply could outstrip demand by 4 mbd next year. If demand doesn’t pick up or supply growth doesn’t slow down, we might see prices drop enough to trigger shut-ins.
Tanker Market Overview
- VLCC: Tight availability at the start of the month kept rates strong. Off-market fixing has continued to shrink the list. By the end of the week, inquiries boosted sentiment.
AG/China at ws139. - Suezmax: There’s solid demand for both short and long East runs.
Basrah/West near 140 × ws75; East around 130 × ws175. - Aframax: Early inquiries for the first decade of December are starting to emerge; sentiment in the Indo market is strong.
Indo up-runs at 80 × ws180; TD14 around 80 × ws170.
West Africa
- VLCC: Inquiries have been slower than in the AG, with only one notable fixture at ws112.5. The list is tight, but there hasn’t been a fresh test.
WAF/East near ws120. - Suezmax: Activity is muted, but tight lists are still supporting owners.
TD20 near 130 × ws155; East premium around 5 points
US Gulf & Latin America
VLCC: It’s been a pretty quiet week with not much demand, but there’s still a solid underlying tone. Brazil–Dalian is sitting at ws110, while WCI is at ws115. Positions are tight because there are fewer ballasters around. USG/China is at $13.90 million.
North Sea
- Aframax: The baseline is hovering around ws157.5. Early in the week, relets were the main focus until TD25 boosted sentiment a bit.
- LRs: LR2s heading West are around ~$4.4 million; options via BEM are close to $4.8 million. TC1 is assessed at 75 × ws155–160. LR1 TC5 is around 55 × ws155.
MRs - TC12 saw a significant jump from ws145 to ws245 after a surge in inquiries.
UK Continent
- MR: Owners are pushing rates up as forward tonnage starts to dwindle. TA is discounted, but WAF, Brazil, and USG are still paying well.
- Handy: With tight lists, TC23 has risen to 30 × ws215; we expect it to open even higher next week.
Mediterranean Products
- MR: Tight front-end lists have pushed Med-TA up to 37 × ws170, and Med-WAF is also looking strong.
- Handy: Consistent inquiries and thinning lists are driving rates up to ws230.
MR (North & Med)
The North remains tight, with XUKC expected to be around ws165–170. The Med MR is trending toward ws160.
Panamax
The clean Panamax market is pretty quiet. USG is steady at ws195–200.
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Source: Gibson
