• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes Middle East on brink: Oil tankers attacked off Oman
  • 8 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 2 hours Iran downs US drone. No military response . . Just Completely Destroy their Economy. Can Senator Kerry be tried for aiding enemy ?
  • 13 mins California and Oil
  • 3 hours The Inconvenient Truth Of Electric Cars
  • 7 hours The Plastics Problem
  • 3 hours Win Against Tyranny: Turkey's Opposition Strikes Blow To Erdogan With Istanbul Mayoral Win
  • 3 hours Ireland To Ban New Petrol And Diesel Vehicles From 2030
  • 12 hours Solar Panels at 26 cents per watt
  • 8 hours Hydrogen FTW... Some Day
  • 2 hours Green vs. Coal: Bavaria Seeks Fast-Track German Coal Exit in Snub to Merkel Plan
  • 18 hours NATO Article 5: Attack on one member is attack on all. Members all must come to defense . . . NOT facilitate financial transactions to circumvent and foil US Sanctions. Somebody please tell Angela.
  • 17 hours Summit in Pyongyang: China's Xi Says World Hopes North Korea-U.S. Talks Can Succeed
  • 14 hours What's more Important Iran Nuke Deal or Strong China Trade Deal. Hypothetically, If China offered Trump North Korean and Iran deals in exchange for concessions on trade deal should he take it ?
  • 3 hours Here We Go: New York Lawmakers Pass Aggressive Law To Fight Climate Change
  • 18 hours Huge UK Gas Discovery

Breaking News:

Oil Pipelines Sabotaged In Syria

Alt Text

Bullish EIA Data Pushes Oil Prices Higher

After two consecutive weeks of…

Alt Text

Small Crude Build Sends Oil Lower

Oil prices continued to fall…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Trending Discussions

UAE Offers India Free Oil To Ease Storage Woes

In an oil sector first, the oil-rich United Arab Emirates (UAE) has offered free oil to India in return for a storage deal at India’s planned underground facility as the supply glut worsens and some analysts predict that ‘’peak storage” could sending prices crashing further.

The UAE’s Abu Dhabi National Oil Company (ADNOC) has agreed to store crude oil in India's maiden strategic storage facility, sweetening the deal by saying India could take two-thirds of the oil for free.

It’s a great deal for India, which is almost fully reliant on imports to meet its crude oil needs.

India has lured Abu Dhabi in with the building of a massive underground storage facility system that will be able to take on 5.33 million tons of crude as a bulwark against global price shocks and supply disruptions. Related: Rig Count Plunges Yet Again, Down Another 30

ADNOC is eyeing half the storage capacity at one of the new underground facilities, Mangalore, which has a 1.5-million-ton capacity on its own. Abu Dhabi plans to stock 0.75 million tons, or 6 million barrels of oil, here, and 0.5 million tons will belong to India.

The deal is reflective of a wider, global storage panic and talk of what could happen when we reach ‘’peak storage’’. A number of analysts have suggested that oil prices might crash to $20, or even $10 a barrel, if storage tanks become full.

Storage is now at the highest level in at least a decade.

In the U.S., crude storage levels hit 487 million barrels in early November, closing in on the 80-year high of 490 million barrels hit earlier this year. Related: In Spite Of Its Vast Oil Reserves, Cuba Fails To Woo Investors

According to the U.S. Energy Information Administration (EIA), about 60 percent of the U.S.’ working storage capacity is filled.

Globally, the picture isn’t much better, with the International Energy Agency (IEA) saying that 1 billion barrels were added to storage in 2015 alone. OPEC has reported that crude oil stockpiles in OECD countries currently exceed the running five-year average by 210 million barrels.

This has given impetus to more creative storage ideas and will at least be a boon to massive storage projects such as India’s.

Floating storage—a more expensive option—is now looking more attractive as well. But to make this work, the math has to be in order, which means that front-end crude spreads would have to be wide enough to cover the cost of storing oil in pricey floating facilities.

Late last month, Bloomberg reported that trading giant Glencore had chartered four very large crude carriers (VLCCs) to store oil off Southeast Asia. But there’s still onshore storage capacity, and we’re not quite to the point where the floating option is widespread. Related: There Will Be No OPEC Cut

The U.S. still has 100 million barrels of available storage, and we should see more storage capacity by the end of this year. The Middle East is also slated to add capacity in the coming years, with the UAE specifically planning to expand its capacity to take on another 10 million barrels.

The analytical panic is perhaps premature. We’re not facing ‘’peak storage’’ just yet, but Abu Dhabi is playing it smart and safe.

Still, the UAE estimates the oil glut at 2 million barrels a day and growing, and its own storage expansion plans will benefit from this. After all, it houses the biggest oil storage port on the Persian Gulf—Fujairah Oil Terminal FZC—on the Hormuz Strait.

Fujairah received its first shipment just this month of 1 million barrels, and storage capacity is slated to increase 75 percent this decade.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • sr1 on February 15 2016 said:
    It is not "free" oil in return for storage, it is payment of the storage charges in commodity volumes. Catchy but misleading title! A good way to lose credibility!

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News