Stanley Reed, THE NEW YORK TIMES
A chaotic mismatch between the supply and demand for oil is saturating the world’s ability to store it all.
The world is awash in crude oil, and is slowly running out of places to put it.
Massive, round storage tanks in places like Trieste, Italy, and the United Arab Emirates are filling up. Over 80 huge tankers, each holding up to 80 million gallons, are anchored off Texas, Scotland and elsewhere, with no particular place to go.
The world doesn’t need all this oil. The coronavirus pandemic has strangled the world’s economies, silenced factories and grounded airlines, cutting the need for fuel. But Saudi Arabia, the world’s largest producer, is locked in a price war with rival Russia and is determined to keep raising production.
Prices have plummeted.
“For the first time in history we are seeing the likelihood that the market will test storage capacity limits within the near future,” said Antoine Halff, a founding partner of Kayrros, a market research firm. As storage space becomes harder to find, the prices, which have already fallen more than half this year, could drop even further. And companies could be forced to shut off their wells.
This chaotic mismatch in supply and demand has benefited consumers, who have watched gasoline prices slide lower.
And it has been a field day for anyone eager to snap up cheap oil, put it someplace and wait for a day when it’ll be worth more.