At least 18 million barrels of Saudi crude are on track to arrive next month in the US, while the country already has swelling stocks that push WTI crude futures into negative territory.
Saudi Aramco's shipping arm Bahri chartered at least nine very large crude carrier (VLCC) tankers for delivery to the US Gulf coast when the country ramped up its supply in March. The nine are broadcasting expected arrival dates between 1 May and 22 May, and none have changed direction.
The contango structure on the crude forward curve is encouraging traders to seek storage in the hope of capturing higher prices in the future. This, coupled with sharply lower demand arising from measures to tackle the Covid-19 pandemic, is rapidly filling tank capacity. US crude inventories totalled 503.6 million barrels or 57 percent of capacity on 10 April, so Bahri's May deliveries alone could account for 2 percent of the US overall storage capacity.
The price collapse has prompted calls from US senators representing oil-producing states to call either for tariffs on Saudi and Russian imports or for the Saudi tankers to be barred from unloading in the Gulf. There, US exporters are loading tankers with seemingly no designated buyer.