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Charles Kennedy

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Shocking Photo: Nearly 30 Oil Tankers in Traffic Jam Off Iraqi Coast

Oil tankers are caught in a traffic jam near the Iraqi port of Basra, causing delays in loading. According to Reuters, around 30 very large crude carriers (VLCCs) are sitting in the Persian Gulf, and the backlog could cost ship owners more than $75,000 per day. Some could be waiting for weeks to reach the port.

Check out this shocking satellite photo of the tanker traffic jam just off the coast of Iraq.

 

(Click to enlarge)

The culprit is high oil production in Iraq. The port at Basra is struggling to load up all the oil tankers fast enough, forcing some to sit and wait. Iraq exported about 3.26 million barrels per day (mb/d) in March from its southern coast, which is up from just 2.5 mb/d in 2010. Related: Advantage U.S. In The Global Petroleum Showdown?

And the line of tankers appears to be growing. The gridlock is forcing up the cost of renting an oil tanker. That, combined with the shrinking capacity of available storage in China is pushing up tanker rates in Asia as well. Shipping data shows that VLCC rates have doubled from $37,250 per day to $74,700 per day.

As of now, Reuters calculates that there are 27 VLCCs sitting in the Gulf near Basra, holding about 43 million barrels of oil, double the typical backlog. Some have been waiting for weeks. The current waiting time is 18 to 19 days, which is two to three times the normal wait of 5 to 10 days. Related: $120 Oil As Soon As 2018?

Reuters contacted a captain of one oil tanker, who said that he wasn’t sure when he would be able to load up at the port. "We've been given no details," he said, declining to be identified.

Meanwhile, onshore, Iraq is struggling with a bit of rising instability in the country’s south, which is far from the battlefields with ISIS and has been one of the few refuges of stability. However, militias have a growing presence there, raising concerns for the international oil companies operating in Basra.

By Charles Kennedy of Oilprice.com

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Leave a comment
  • Roger Mud on April 07 2016 said:
    Why does tanker congestion indicate Oil Glut? The tankers would not be there if there wasn't demand. I am more inclined to think supply disruption.

    Time will tell.
  • lee ciardella on April 07 2016 said:
    everybody is an expert in predicting the future of oil, weather, stocks etc. Early last year it was predicted that gas would reach $5.00 per gallon.

    All these prediction do is get the public ready for high prices. Gas is currently around $2.50 per gallon and oil is less than $40.00 per barrel. They are keeping it there because that is the new one dollar per gallon. When oil rises then gas can begin to rise form $2.50 instead of $1.00.

    Gasoline rises 14 - 20 cents per gallon whenever they see fit for what ever excuse. It fall 2 cents per week when ever they see fit.

    Now the tankers are stalled. Keep them there so quantities will dip and prices will rise.
  • David on April 09 2016 said:
    If they are HOLDING 43,000,000 barrels of oil why don't they just leave?

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