The complex crude glut picture

The swelling crude supply story involves the key plot twists of reluctant buyers, limited oil stocks and refiners playing the long game

The IEA is adamant the crude oil surplus is growing. Much of this oil was produced by Russia and now sits on ships, waiting for buyers. Potential customers, however, who are threatened by US sanctions on Russian oil, cannot be found. Rising tanker rates and increasing crude differentials reflect the situation as more Russian oil ends up in floating storage. It has been recently reported that Urals crude dropped below $40/bl as Dated Brent sold for more than $60/bl. Meanwhile, product inventories are tight and refinery margins are approaching record levels. Refining profits have been boosted by the sanctions on Russian crude as well as the instinct of processors to keep inventories tight when