Rising oil-on-water volumes are the latest red flag for oil markets. Since September, the amount of oil stored at sea has surged, reviving comparisons with the 2020 coronavirus crisis and leading to concerns that demand is weakening.
However, that interpretation fails to capture the full picture. Today’s oil-on-water build is more nuanced and reflects a story of logistical bottlenecks, refinery constraints, and structural shifts in global oil flows.
Since early September, an additional 215 million barrels of crude have accumulated on the water, lifting crude oil-on-water volumes by roughly 19 per cent, according to analysts at Kpler. Total oil-on-water now stands at around 1.3 billion barrels. While the surplus is becoming more visible, it remains manageable. Unlike in 2020, when oil flooded storage due to a demand collapse, today’s build-up is occurring against a backdrop of healthy product demand and strong refining margins.
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