Traders are scrambling to secure oil storage tanks on land and at sea to cope with slumping demand resulting from the coronavirus outbreak and a flood of supply from the Saudi-Russia price war.
Rates to store oil at the world's main trading hubs from Japan to South Africa and the US are surging as millions of unconsumed barrels of oil hit the market daily.
Trading house Glencore this week also chartered one of two of the world's largest oil tankers, capable of carrying 3 million barrels of oil, in order to store crude at sea.
Royal Dutch Shell has booked at least two large crude tankers for floating storage, on expectations that onshore tank space will not be enough to meet the glut.
The need for a place to park all that surplus crude is breathing new life into the market at Cushing, Oklahoma, the nation's hub for trading of billions of dollars of crude a day and the town that bills itself "the pipeline crossroads of the world".
Analysts estimate the glut could reach more than 1 billion barrels.
Some of the excess will be absorbed by nations snapping up cheap oil for strategic reserves, including India and the US, but that will only mop up some of the supply.
Asia tops the list of storage locations with 22 million barrels of the 63 million barrels in global floating crude inventory as of March 17, according to oil analytics firm Vortexa.
Six new tankers carrying up to 7 million barrels of crude entered floating storage in China this month, Vortexa said.
Storage rates at Cushing doubled over the past month, and were seen as high as about 50 cents per barrel per month by Friday, two traders familiar with the matter said.
Storage for about 540,000 barrels at Plains All American's Cushing tanks for sublease was offered at 50 cents per barrel (cpb) for a term of one year, one source said.
"We average about two deals per day. Last week we booked 60 deals," said Ernie Barsamian, founder and CEO of The Tank Tiger, a terminal storage clearing house based in Princeton, New Jersey.
The US currently has more than 450 million barrels in crude storage, not including strategic reserves.
The drop in prices has sparked numerous storage inquiries, particularly at Cushing, the delivery point for benchmark US crude futures.
Nearly 38 million barrels are currently parked there, half the about 76 million barrels in capacity.
The rest of US storage is at smaller tank farms or refining facilities.
Inventories at Cushing rose more than 640,000 barrels in the week up to Friday, traders said, citing data from market intelligence firm Genscape.
"Everyone and their mother is scrambling to fill up tankage," one trader said.
Once a barometer for the health of US crude supply, Cushing's market clout waned after Washington lifted a ban on US crude exports in late 2015 amid the shale oil boom.
Companies have since spent millions of dollars building infrastructure to facilitate trading and storage at the country's Gulf Coast ports.
But with a wave of Saudi and Russian oil set to hit, US crude exports are expected to plunge by about 1 million barrels per day (bpd) in April and May to about 2.5 million bpd, sources at the biggest merchants in the country said on Friday.
Domestic demand has also plunged, with US gasoline prices plummeting to a record low as travel grinds to a halt due to the pandemic.
Storage at Cushing is held by large midstream companies including Plains All American, Magellan Midstream and Enbridge Magellan said Monday that it is seeing increased interest for long-term crude storage in Cushing.
The crude market is currently trading in what's known as contango, where forward prices are higher than immediate prices.
That incentivises traders to park barrels into storage in the hopes of selling them for a profit later.
Commercial crude oil storage in South Korea, one of the largest in Asia, was mostly taken up last month when contango first occurred this year, Asian sources said.
Barsamian said that as the spread widens, the cost for storage will as well.
"The contango will begin to feed on itself and get steeper, unless the Saudis and Russia pull an about face.