Oil’s Billion-Barrel Sea Surplus Expands as Output Swells

A flotilla of crude oil on the world’s oceans expanded to a fresh high as producer nations keep adding barrels and the tankers sail further for deliveries.

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A total of 1.24 billion barrels of crude and condensate, a light form of oil recovered from gas fields, was moving on tankers in the week to Oct. 17, according to data from analytics firm Vortexa. That was up from a revised 1.22 billion barrels a week earlier.

Oil traders warned last week that a long-anticipated surplus is finally starting to materialize and the amount of cargo at sea is one indicator of that.

Production is rising from members of the OPEC+ group of nations, which are unwinding earlier output cuts — as well as countries outside the group, predominantly in the Americas, where Guyana recently started pumping from a new offshore field and US output hit a new high.

The build-up comes at a time when demand growth is slowing, with forecasters predicting a surplus that could rise to as much as 4 million barrels a day in the early months of next year.

Source: Vortexa

Oil prices fell 0.8% on Monday, taking their decline so far this year to 18%.

Eight members of the Organization of the Petroleum Exporting Countries and their allies, which together make up the OPEC+ grouping, raised their collective production target by almost 2.5 million barrels a day between March and September. While increases in actual production have lagged, the group still added more than 2 million barrels a day to supply over that period.

Vortexa’s figures exclude oil in floating storage, defined as being on vessels that have been stationary for at least seven days.

The biggest increases have come from Saudi Arabia, the United Arab Emirates and Russia, whose combined output has risen by 1.77 million barrels a day. Most of the barrels are being shipped to buyers in Asia, principally China, on voyages that take about a month from the Middle East and often twice that from Russia, according to vessel-tracking data compiled by Bloomberg.

The increases in OPEC+ production have been gathering pace. The group’s output rose by 630,000 barrels a day in September, the biggest month-on-month addition in four years, according to secondary source data published by OPEC.

Guyana Shipments

Elsewhere, Guyana shipped the first cargo of its new Golden Arrowhead grade at the end of August, with production soon to reach its plateau level of 250,000 barrels a day. And US output is hitting new highs, topping 13.63 million barrels a day in the most recent weekly data from the Energy Information Administration.

Those barrels are traveling further, meaning they’re spending longer at sea, boosting the amount of oil in transit.

A supertanker full of Guyanese crude is heading for China, the first since May. Its voyage is expected to take more than six-and-a-half weeks, over three times as long as the trip to Rotterdam, Guyana’s biggest European destination.

Two Indian refiners have also bought shipments of Guyana’s crude, the first since at least November 2021 when Bloomberg started tracking the flows.

(Updates with Monday’s oil price in first paragraph after chart.)