Energy consulting firm Rystad Energy estimates the largest global surplus in oil supply history will hit the market next month, generating a glut of about 10 million bpd a day.
The firm analysed storage infrastructure around the world with its data showing around 76% of the world’s oil storage facilities are currently at full capacity.
The analysis comes after the world’s largest oil trader, Vitol, said it estimates global oil demand to slump by more than 10% due to COVID-19 related lockdowns spreading worldwide.
Rystad estimates oil supply will soon surpass demand by six million bpd this year, leading to an accumulated implied storage build of two billion barrels in 2020.
Paola Rodriguez-Masiu, senior oil markets analyst at Rystad Energy, says: ‘The current average filling rates indicated by our balances are unsustainable. 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.’
The company believes there is about 7.2 billion barrels of oil and related products in storage at present, including 1.3 billion to 1.4 billion barrels on board oil tankers.
Saudi Arabia and other producers have already met capacity for storage on board Very Large Crude Carriers (VLCC) for March and April 2020.