Covid-19's effect on global energy markets has been disastrous. OPEC slashed its oil demand forecast last week, and Goldman Sachs doubled down on its bearish oil take and has cut its oil price target by $10 to $53 for the year, as a result of a "demand shock" that is set to collapse Chinese oil consumption by 20%, or as much as 4 million barrels per day.

The sharp decline in demand in China, which by the way, is the world's largest oil importer, is now stranding oil cargoes off the country's coast and across Asia.

Bloomberg's Stephen Stapczynski records footage of an impressive parking lot of tankers and other vessels off the coast of the anchorages of the port of Singapore, one of the largest freight hubs and busiest ports in the world.

Much of the oil consumption decline is because, as we reported on Friday, China's economy is faltering as its industrial hubs remain shuttered.

Take a look at the chart below, in the Feb 7-13 week, steel apparent demand is down a whopping 40%, but that's only because flat steel is down "only" 12% Y/Y as some car plants have ordered their employee to return to work.

Real-time measurements of air pollution (a proxy for industrial output), daily coal consumption (a proxy for electricity usage and manufacturing), and traffic congestion levels (a proxy for commerce and mobility) suggest that the second-largest economy in the world has frozen. This all indicates the demand for energy products to power machines and vehicles has abruptly stopped.

A significant bottleneck for Very Large Crude Carriers (VLCCs) deliveries to China is developing, forcing some ports to reject new tanker loads, contributing to a parking lot of tankers sitting off the coast and in other regions in Asia.

Some cargos have been diverted to Singapore, Malaysia, South Korea, but even in those regions, tanker traffic jams are building.

Crude storage in China filled up near full capacity last summer, mostly due to declining demand thanks to a decelerating economy.

China's overall crude storage is around 760 million barrels, versus a peak of 780 million barrels last June.

Middle East traders who export crude via VLCCs to China reported weaker demand. VLCC rates from the Middle East to China have plunged since the virus outbreak began early last month.

"In gas markets, a one Chinese company declared force majeure, potentially allowing it to walk away from contractual commitments. The measure was rejected by Total SA and Royal Dutch Shell Plc. There are now 12 empty liquefied gas carriers sitting off the coast of Qatar, one of the world's biggest producers. While the precise reasons for the idling vessels aren't known, the timing coincides with ship diversions, cargo cancellations and reduced demand in Asia since the virus took hold. Oil tankers have been dawdling off China," reported Bloomberg.

The parking lot of tankers developing off the coast of not just China but other countries in the region have forced some traders to transfer crude to less expensive tankers to save on demurrage costs, over the fear cargos could be moored offshore for an extended period as an economic crisis in China unfolds.

And to summarize what we know so far: China's economy is collapsing, crude consumption is plunging, which has forced refiners to cut runs as a glut is developing, has now led to tanker parking lots moored off the shores of many countries in Asia.

What is also known is that bunker fuel prices at major ports in Asia, including Singapore, Hong Kong, South Korea, Taiwan, and Japan, have been declining since the virus outbreak began early last month.

The world is bracing for a huge virus shock from China, not seen in over a decade – this could easily tilt the world into recession.