Global oil storage could overflow in the coming weeks as the coronavirus pandemic has dealt a severe blow to demand while Saudi Arabia has promised to supply 12.3 million bpd—not just in April but also over the next few months.
Reuters reports, citing analysts, that such a development would overwhelm the already troubled oil industry, forcing production shutdowns. Storage facilities—both on land and offshore—are already filling up, the news agency noted, and Saudi Arabia has not yet started to increase its deliveries of crude.
If such a scenario unfolds, some analysts believe oil prices could slide as low as $10 per barrel.Some claim that oil - the good stuff, not bitumen - could fall to ten bucks a barrel - if anyone wants the stuff.
“We believe we have not seen the worst of the price rout yet, as the market will soon come to realize that it may be facing one of the largest supply surpluses in modern oil market history in April,” Reuters quoted Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
“There are no buyers,” an oil trader from the U.S. told Reuters. “Refiners in trouble, exporters in trouble, producers in trouble. This is a disaster with no end in sight.”Bear in mind, this mega-glut is before the Saudi's ramped up production comes to market.
“Cargoes are being severely discounted to move as there are little prospects to export and also very few options to store on ship and/or tanks,” another industry source told Reuters.