Oil Price Recovers as Supply Glut Creates Tanker Traffic Jam

As ports struggle to cope with a global oil glut, huge queues of supertankers have formed in some of the world’s busiest sea lanes, where some 200 million barrels of crude lies waiting to be loaded or delivered.

The vessels, filled with oil worth around $7.5 billion at current market prices, would stretch for almost 40 km (25 miles) if formed up in one straight line.

One captain with more than 20 years at sea told Reuters his tanker had been anchored off Qingdao in northeastern China since late March and was unlikely to dock before the end of this week, a frustrating delay of more than three weeks.

“We’ve stayed here a long time,” he said, requesting anonymity because he is not authorized to speak to the press, but added that another kind of jam was helping to alleviate the boredom.

“We have a piano, drums, crew who play guitar – they are not professional but they are coming good. We have more than 1,000 DVDs so there is no need to watch the same one 20 times.”

The worst congestion is in the Middle East, as ports struggle to cope with soaring output available for export, and in Asia, where many ports have not been upgraded in time to deal with ravenous demand as consumers take advantage of cheap fuel.

“It’s the worst I’ve seen at Qingdao,” said a second tanker captain waiting to offload at the world’s seventh busiest port, adding that his crew was killing time doing maintenance work.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza