The rise in oil inventories stored both on land and at sea has recently surged, presenting an alarming indication of weakening market conditions that could exert downward pressure on oil prices for an extended period. Currently, oil prices have fallen to around $65 a barrel, down from a peak of $82 in January. This drop can be attributed to apprehensions over the economic repercussions of U.S. trade policies, along with OPEC+’s decision to augment production unexpectedly.
Despite oil consumption not showing any significant decline thus far, with refining margins remaining robust and demand increasing by nearly one million barrels per day in early 2025 compared to the previous year, fresh data points toward a shift. According to the International Energy Agency (IEA), global oil inventories increased for the second consecutive month, reaching 7.7 billion barrels by March. While this figure still falls below the five-year average, it’s evident that the inventory trend is unfavorable, with the IEA forecasting an average rise of 720,000 barrels per day this year, intensifying to 930,000 barrels per day next year.
Furthermore, satellite data from Kayrros reveals a recent acceleration in onshore crude inventories, which have topped 3.127 billion barrels—marking the highest level since the COVID-19 pandemic, aside from seasonal peaks. Notably, China’s oil stockpile reached a record of 1.127 billion barrels in May, reflecting efforts to accumulate supplies during a low-price phase, although the overarching trend remains bearish. The situation is worsened by a rise in oil stored in floating tankers, which signals a longer duration for producers to find buyers.
Recent analytics show that floating storage has increased by 14% over the past month, reaching over 160 million barrels, a two-year high. This surge, combined with elevated onshore inventories, indicates that oil demand is lagging behind supply growth, raising concerns that prices may need to adjust downward further as OPEC+ anticipates ramping up production even more.