Uncharted waters: Why rising waterborne oil supplies are the lifeline of global energy grid

By April and May 2026, global stocks fell by a further 117 million barrels. While on-land inventories plummeted by 170 million barrels (down 5.7 mbpd), oil-on-water saw a rebound of 53 million barrels. Analysts, however, warn that this is a deceptive metric.

When the conflict began in late February, floating stocks became a crucial, albeit temporary, source of relief. Now, with the conflict over 75 days old, waterborne inventories are being closely monitored. Global floating storage, which stood at 140 million barrels at the end of 2025, plummeted to approximately 78 million barrels by late March.

While storage saw a technical rebound to 153.8 million barrels by early May, above pre-conflict levels, this rebound does not signal a recovery. The increase in waterborne inventory is due to ton-mile effects; crude is now travelling much longer distances to reach its destination. For instance, while crude typically takes under a week to reach Indian shores from West Asia, it takes over three weeks when sourced from Russia. Consequently, oil remains floating for longer.

Furthermore, increased traffic at various maritime bottlenecks has led to congestion, and these figures now include sanctioned fleets and vessels trapped within the Strait of Hormuz.

Asia has borne the brunt. As one of the world's most import-dependent regions, India has been forced to navigate a rapidly tightening market where physical availability is as critical as price. Crude costs in the domestic market have swung wildly between $100 and $144 per barrel. The broader Asian markets were also hit, with Chinese seaborne imports falling by 3.6 mbpd and Japan experiencing a reduction of 1.9 mbpd.

Current estimates suggest that global supply will trail demand by 1.78 mbpd for the entire 2026, a sharp reversal from the surplus projected only six months ago. Increased output from the US, Brazil, and Canada has reached 1.5 mbpd, but this remains insufficient to offset the massive volumes lost in West Asia.

The outlook for the remainder of the year hinges entirely on the geopolitical situation. If a diplomatic resolution allows the Strait of Hormuz to reopen by June, the IEA projects that global production could begin to normalise, potentially cooling prices to approximately $89 per barrel by the fourth quarter.

If the blockade persists, the world faces a prolonged period of operational stress, with industry leaders cautioning that full normalisation may not occur until 2027.

Despite these strategic bottlenecks, waterborne supplies remain the lifeline of the global energy grid, serving as a floating pipeline that keeps the world’s most critical economies from coming to a complete standstill. This oil on the move represents a resilient, mobile reserve that, unlike fixed pipelines, can be rerouted and redirected, offering flexibility and hope that as long as the tankers are sailing, the pulse of global industry can be sustained.

Pankaj Sharma is former additional director, petroleum planning and analysis cell, ministry of petroleum and natural gas. Views are personal