Publications: Notes at the Margin

Sterilization of Oil Flows Keeps Prices High (December 22, 2025)

 

The tenor of the commentary on the growing crude oil glut now borders on hysteria. Analysts warn that the oil volumes at sea will surpass the record levels set during the Covid disruption. Again and again, one sees predictions of a price collapse in 2026, absent production cuts. One barrel counter told Bloomberg, “I’ve never seen a consensus as large as what we’ve seen, I would say the last three, four months on the balances.”[i]

 

A table published by Platts indicated that the situation today is eerily similar to 2020, when prices dropped and, on one occasion, even became negative. As the table shows, sea-borne crude and product inventories at the end of May 2020 totaled 1.833 billion barrels, while these stocks at the end of November 2025 were 1.828 billion barrels.

 

However, identical barrel balances are not the same as identical economic conditions. There is this thing called the “market.” The market situation in 2025 is very different from the market condition in 2020.

 

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