We are currently observing a mile-stone in the build up of the global oil glut, as some of the world largest oil traders last week hired supertankers to store crude oil at sea.
Some of the traders having adapted this strategy include Vitol, Transfigura and Shell, says Reuters.
This strategy was also implored in 2009 when oil prices last crashed.
Essentially the crude oil is stored on vessels, Very Large Crude Carriers (VLCC) with a carrying capacity up to 2 million barrels. The point is to hire the VLCC up to 12 months, essentially waiting for the crude oil price to rebound. This is made possible because the oil traders are able to get hire rates for the VLCCs down more than 50% paying a hired rate of approximately $40.000 a day compared to the current spot rate: $97.000/day.
Currently approximately 12-15 million barrels of floating storage has been booked. In 2009 it went as far as 100 million barrels.