The International Energy Agency (IEA) expected that by the middle of this year, storage facilities of oil could be overwhelmed by the global oil supply glut affected by the coronavirus pandemic.
“In the coming weeks, the glut would overwhelm the oil industry’s logistics such as ships, pipelines, and storage tanks,” the IEA warned.
In the first half of the year, the global oil stockpiles would still accumulate by 12 million bpd and the logistics of the industry would likely be overwhelmed.
The IEA estimated the global oil demand to plunge by a record 9% this year. The effort of oil output cuts by the Organization of Petroleum Exporting Countries and its non-member oil producer allies (OPEC+) was deemed a little too late although it should provide support for the oil industry to go back from the brink.
The world’s biggest oil consumers including China, India, South Korea, and the US have offered rents of their strategic inventories for oil market players to store unmoved barrels. They consider to fill up their own reserves while prices are low.
Oil companies are reported to slash upstream investment by 32% in 2020 to USD335 billion, the lowest level in 13 years. Involuntary supply cuts from producers outside the OPEC+ would be more than 5 million bpd in the fourth quarter.
