The United Kingdom has temporarily become the centre of the worldwide oil glut, as falling demand among refineries has prompted traders to hoard crude oil off the coast of the country, on a number of ships.
As many as 14 million barrels of North Sea crude oil – equivalent to over a fortnight’s worth of UK production – currently sit anchored in huge supertankers off the coast of Cornwall, Southwold and the Firth of Forth.
Although crude oil stocks have been declining in other areas of the world, the squadron of oil storage vessels off the coast of the UK shows how difficult it will be to bring oil supply and demand back into balance, with so many regional weaknesses becoming apparent.
Since oil prices reached a $50 (£37.78) high for 2016 back in June, prices have fallen by nearly 20%, and are now not far from a low of $40 (£30.22). This is putting huge pressure on oil companies and the world’s biggest producers, who had hoped that prices were starting to recover following a two-year market crash.
The majority of the oil is being stored on tankers that were not long ago used to lift North Sea crude, according to trading sources. The crude being carried by the tankers will help to underpin the benchmark for world oil – the Brent future’s contract – and this could help big oil companies like Fuchs, Royal Dutch Shell, and ExxonMobil, which rely on a strong oil market for success and the production of the likes of Fuchs WSP 783-L and Mobil DTE 10 Excel 32.