South Korea’s Jeju island is famous for the haenyeo, the sea women who dive for seaweed and shellfish in the waters off the volcanic coast, but a new sight has become common bobbing offshore: oil tankers. The country, the world’s fifth-largest oil importer, is fast running out of commercial storage space, leaving some of Asia’s biggest refiners scrambling for alternatives as the coronavirus pandemic batters energy demand and feeds a glut in global supply. “We are in an unprecedented crisis,” said Kim Woo-kyung, at the country’s largest refiner, SK Energy.

South Korea has the fourth-largest commercial storage capacity in Asia, and is a popular spot to store crude and fuels thanks to its proximity to the region’s big oil buyers, including China and Japan. n addition to its own refiners, state-run oil companies in countries such as the United Arab Emirates and Kuwait use South Korea’s storage facilities. With onshore facilities nearly overflowing, refiners are turning to costly floating storage.

SK Energy has filled 95 percent of its 12m-barrel onshore crude oil storage capacity, and storage on vessels –  such as the 2m-barrel carrier it is using off J eju – is running perilously low. “We are paying tens of thousands of dollars a day to keep the [oil carrier] floating but we have no other options,” said Ms Kim. South Korea ‘s biggest refining groups including SK Energy, GS Caltex, S-Oil and Hyundai Oilbank reported combined operating losses ofWon4-4tn ($3.6bn) in the first quarter in their worst-ever performance, according to regulatory filings.

Goldman Sachs warned in late April that the world would reach full oil storage capacity within weeks as coronavirus crushed demand just as a price war between Saudi Arabia and Russia boosted supply. While the worst is now past, Goldman reckons, thanks to an agreement by Opec and its allies to cut about 10 per cent of global supplies from early May, the move to ease production has yet to feed through to oil refiners.