Saudi Belligerence Pushes VLCC Rates to Comedic Highs

In an interview given to Gaurav Sharma from Rigzone, Dr Carole Nakhle, CEO of Crystol Energy, comments on the latest spring seen by trading houses and oil majors to store oil following the oil price collapse as a result of the agreement failure between Saudi Arabia and Russia over production cuts and the decision of the former to go into a ‘punishment’ mode and flood the markets with crude oil.

According to Dr Nakhle, the current situation is unsustainable. Spot prices have been hit hard. Admittedly, much of the crude oil is on its way to storage. If the current oversupply continues, we would expect the contango to decline as people realize that the oil glut is here to stay; and then VLCC rates to come down as storage fills up and crude producers start to cut.

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