Most of you are already familiar with the lack of tanker flows we’ve shared. If not, this was the latest video update.
Many of the tanker-tracking firms, including Bloomberg and Kpler, have begun including daily tanker flow calculations. AIS games are currently in play, so manual checks are required to get an accurate read of the tanker flow.
So far in March, the disruption to OPEC+ crude exports is severe.
As the month progresses, if the tanker flow does not return to normal, this average will fall even lower.
In this article, I will share where we are in the oil market today.
Where are we?
Global onshore oil inventories have not declined just yet.
This is an important point to understand. Why? OPEC+ countries like Iraq, the UAE, Kuwait, and Saudi Arabia have onshore crude oil inventories they can fill before they shut in production. The above chart includes onshore inventories from those countries, so we have not yet seen the impact of the production shut-in.
Reuters reported today that the Saudis reduced production by ~2 million b/d. This aligns with the East-to-West pipeline’s maximum capacity of ~5 million b/d. Saudi will be able to maintain the ~8 million b/d production for a while longer.
Our estimate is that the total production shut-in has reached ~6.5 million b/d, or in line with JPM’s latest update.
JPM estimates that by the end of next week, this total will reach ~10 million b/d, in line with the flow disruption in the Strait of Hormuz.
And every day after that, we will start to see the impact on global onshore oil inventories rapidly.