Physical oil prices have surged to record highs, nearing $150 a barrel, as the Iran war disrupts global supply chains through the Strait of Hormuz. The crisis has triggered panic buying among refiners and widened the gap between spot and futures markets.
Key highlights
- Physical crude prices approach $150 per barrel
- Iran war shuts down ~12% of global oil supply
- Refiners scramble for immediate cargoes
- Supply panic widens gap between physical and futures prices
What happened
European and Asian refiners are paying record prices for immediate crude supplies. Some cargoes are trading close to $150 per barrel, far above benchmark futures.
The war has shut down about 12 million barrels per day of oil supply. This accounts for roughly 12% of global production.
Brent futures rose to around $119.50 per barrel last month. But physical cargo prices have surged much higher due to urgent demand.
North Sea Forties crude hit an all-time high of $146.09 per barrel. Dated Brent prices also crossed previous records, reflecting tight near-term supply.
Why this matters
The gap between physical and futures prices signals a real supply shock. Markets are no longer pricing future expectations alone.
Refiners need oil immediately, not months later. This urgency is driving extreme price spikes.
Higher crude costs will likely feed into global inflation. Fuel, transport and manufacturing costs could rise sharply.
Official word
Oil trader Adi Imsirovic said supply panic is driving prices.
“When there is a real, physical shortage, people are not thinking about future delivery, but oil now.”
Morgan Stanley analysts said markets are scrambling for refinery-ready barrels.
They noted that stress is visible in the physical segment closest to immediate supply needs.
Sector performance
Energy markets are under severe pressure.
Jet fuel prices in Europe are near record highs. Diesel prices are also elevated, though slightly below peak levels seen in 2022.
Refining margins are tightening as input costs surge.
Other market moves
The premium of physical crude over futures has widened sharply.
Dated Brent is trading nearly $20 above front-month futures contracts.
This reflects immediate supply scarcity rather than long-term expectations.
Australia angle
Higher oil prices could increase fuel costs in Australia.
Import-dependent sectors may face rising transport and logistics expenses.
Energy-driven inflation could pressure the Reserve Bank of Australia’s policy outlook.
Now what?
If the Strait of Hormuz remains disrupted, prices could rise further.
Even if supply resumes, normalisation may take time.
Markets will closely track shipping flows and geopolitical developments.
FAQs
Q1: Why are physical oil prices rising faster than futures?
Because refiners need immediate supply, creating a premium for spot cargoes.
Q2: How much supply is disrupted?
Around 12% of global oil supply has been affected.
Q3: What is dated Brent?
It is a benchmark reflecting the price of physical crude for near-term delivery.
Q4: What does this mean for consumers?
Higher fuel prices and inflation risks globally.
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