Oil at Sea Climbs to New High on Rising Supply, Longer Voyages

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(Bloomberg) — The amount of crude being hauled across the world’s oceans continues to increase, as rising production and greater distances between exporters and importers keeps cargoes at sea for longer.

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

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Production is rising from members of the OPEC+ group of nations, which are unwinding earlier output cuts, and 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.

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The build-up in the amount of oil on tankers 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.

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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.

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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.

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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.

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Guyana Shipments

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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. 

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

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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.

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

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