The global oil market is broken, overwhelmed by an unmanageable surplus as virus lockdowns cascade through the world’s largest economies.
Onshore tanks in many markets are full, forcing traders to store excess oil in idle supertankers. Refineries are starting to shut down because nobody needs the fuels they produce. In physical oil markets, barrels are already changing hands for less than $10, and in a few landlocked markets producers are paying consumers to take away their crude.
“The physical oil market has seized up,” said Gary Ross, an influential oil watcher and chief investment officer of Black Gold Investors. “The logistics are struggling to cope because we are facing a catastrophic loss of demand.”