Publications: Notes at the Margin

A Different Disruption (November 17, 2025)

 

According to the International Energy Agency’s most recent report, the crude oil surplus is growing. Much of that 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. Last week, Argus Media reported that Urals crude dropped below $40 per barrel as Dated Brent sold for more than $60.

 

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 confronted by a possible price war among crude producers.

 

The situation reminds us of a line from Samuel Taylor Coleridge’s “The Rime of the Ancient Mariner”: “water, water, everywhere, nor any drop to drink.”

 

In this case, one needs to substitute “crude oil” for “water” and “not a barrel to refine” for “drop to drink.”

 

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