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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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The Surprising Winners And Losers Of The Global Oil Glut

Storage tanks

Despite the historic OPEC+ production cut deal, available oil storage capacity around the world is running thin as global oil demand continues to crumble amid lockdowns and travel restrictions in many countries.

OPEC and its Russia-led allies promised to remove 9.7 million bpd from the market starting in May. But oil storage capacity may be full as early as in the middle of May, according to many analysts.  

In this unprecedented global oil glut, some sectors of the oil industry and some oil-producing countries and their national oil companies (NOCs) are set to fare better than others, petroleum economics and energy policy expert Michael Lynch writes in an article in Forbes.

Like in every extreme market situation, there will be big winners and big losers while the oil industry is scrambling to stash crude oil and refinery products that no one really needs right now.


The OPEC producers who don’t have adequate refining capacity at home and don’t have solid long-term oil supply contracts with oil-importing nations are set to lose the most. These are Angola, Nigeria, and Iraq, according to Lynch.  

OPEC’s second-largest oil producer Iraq sells most of the crude it produces. To be sure, Saudi Arabia also does that. However, in recent years OPEC’s top producer and the world’s largest oil exporter has struck some major downstream deals in the world’s top oil importer, China, ensuring long-term demand for its crude in the market.

According to Lynch’s estimates of OPEC’s refinery capacity per member and their target production for May and June, OPEC’s combined domestic refining capacity is half what its members would produce if they all stick to their quotas. Considering that 100-percent compliance in every country has never been achieved in such deals, OPEC members would be likely producing more than two times their combined refinery capacity.

Premium: Oil Storage Nears Its Limit

The countries that have long-term oil supply contracts with importers will be better off than those who rely more on spot crude sales. Data about the global spot crude market is incomplete, at best, Lynch says.

But oil-producing nations with higher shares of spot sales would likely feel the pinch from the storage capacity crunch much harder than others because amid the huge oversupply refiners are even trying to get out of some clauses in long-term contracts, let alone snap up spot cargoes.

Among companies, those integrated firms who have downstream capacity at least would have refineries to send their crude to. However, the downstream economics are terrible right now, because the demand for gasoline, diesel, and jet fuel is plummeting everywhere in the world.

Refined product distributors will lose the most—people are not driving and are under lockdown in many countries in the world, including in India and the largest oil consumer, the United States.  


The biggest winners in the current market situation are the owners of storage capacity—onshore and offshore. Storage has been the most sought-after ‘commodity’ in the energy market in the past month as demand was crashing, and supply was rising.

Offshore, traders are scrambling to book floating storage, and charter rates for supertankers are skyrocketing. Storage costs are surging, and so are costs for chartering tankers to store oil at sea for future sales when traders expect demand to recover from the pandemic-hit plunge. 

Premium: 2 Stocks To Consider As Oil Nears $15

Despite the actions of OPEC+ and G20 to ease the glut, the oil industry may test the limits of its storage capacity in the coming weeks, the International Energy Agency (IEA) said this week.


“Never before has the oil industry come this close to testing its logistics capacity to the limit,” the agency said in its closely-watched Oil Market Report for April.

In the United States, storage will likely fill up by the middle of May. At oil prices so low, forced cuts are coming across the U.S. shale patch, OPEC++ deals or not. ConocoPhillips said this week it would be voluntarily curtailing 200,000 bpd production in Canada and the U.S. until market conditions improve, and others are likely to follow soon.

Amid the glut which OPEC+ cuts will not be able to stave off next month, owners of storage capacity will be the biggest winners in these most unusual times for the oil industry.  

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • Andrew Doolittle on April 19 2020 said:
    The big winner is Vulcan materials which makes oil based aggregate for paving the US Highway System.

    The other winner is Wal-Mart which has the World's largest trucking fleet.

    The US Navy is also a winner.

    Oddly enough because of the raging War in the Middle East going on decades now I would think Iraq would be a big winner. In the alternative is Venezuela and indeed all of Latin America which has to somehow sell aggregate product into the North American market for not just energy but for food and finished goods. Coffee might be possible at the moment. Clothing would be another. Refined product at Ports such as Dover Delaware, New York and of course Miami is another thought at the moment.

    Hard to imagine at one time oil was $140 US Dollars a barrel and natural gas sold for $15.00 US dollars a million cubic feet.

    *Not anymore!* as Inspector Clouseau of Pink Panther fame famously said.
  • Arch Region on April 20 2020 said:
    Diminishing storage for oil is a looming threat to severely slow down drilling. What would then happen to the 145k people employed in the Oil & gas extraction Industry in the US, many of whom would have to furloughed or be laid off?

    Will they be absorbed by the fast growing renewable energy sector that now employs 777k people in the US? If so is that part of the human capital loss that this downturn is causing?

Leave a comment

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