By Sheela Tobben (Bloomberg) –A cluster of ships with American oil has been heading to a small terminal in southern Ireland as buyers search for places to store crude in the wake of a global demand slowdown.
Since April, four vessels carrying a total 2.4 million barrels of American oil have set sail for the Bantry Bay terminal operated by Zenith Energy Management LLC, according to ship tracking data compiled by Bloomberg. Two of those tankers, which loaded oil on the U.S. Gulf Coast, were originally set for the Netherlands and the U.K., but were rerouted to Bantry Bay. The U.S. oil deliveries last month were the first ever for the facility.
It’s “a natural extension of U.S. crude oil in the international trade flow and being driven by market fundamentals,” said Zenith’s Chief Commercial Officer Jay Reynolds.
Storage has become increasingly scarce both on land and offshore as the Covid-19 outbreak has devastated petroleum demand globally. The International Energy Agency said this week it will take more than a year for oil demand to recover to levels before the virus shuttered economies.
Zenith’s Bantry Bay terminal can store about 2 million barrels of crude and the rest of its nearly 9 million-barrel site holds refined products. It was constructed in 1968 for the purpose of importing large cargoes of foreign crude.
“The last time we saw a crude import was in November 2019, but that was a regional crude from the U.K.,” said Syed Ahmad, an oil analyst for shipping data provider Vortexa.
U.S. crude exports to Ireland peaked at 2.4 million barrels in January, according to Energy Information Administration data. Bantry Bay’s storage is fully contracted and utilization has been over 95%.
Until demand recovers, “those seeking some relief from crude deliveries will be diverting their supplies to less-known options like Bantry Bay,” said Ahmad.
–With assistance from Sherry Su.
© 2019 Bloomberg L.P