SEATTLE (Oil Monster): The Iran war, opens new tab has torn open a dangerous rift in global oil markets: physical crude is trading at record highs while futures benchmarks signal calm. That disconnect is forcing consumers, companies and policymakers to navigate without a reliable compass - and it could leave a lasting scar on the global economy.
Investors have struggled to price the unprecedented disruption to global oil supplies since Iran effectively closed the Strait of Hormuz following the U.S.-Israeli strikes on February 28.
The blockade has cut off nearly a fifth of global oil flows, triggering acute supply shortages in Asia and, increasingly, in Europe and forcing Gulf producers to shut in around 9 million barrels per day (bpd) of production.
Global benchmark Brent crude futures surged 64% in March, setting a record monthly gain, to a peak of $118 a barrel. Prices then fell back to around $95 after the U.S. and Iran agreed to a ceasefire on April 7. But after the failure of talks to end the war, U.S. President Donald Trump on Monday imposed a blockade on ships entering and exiting Iranian ports and coastal areas, pushing prices back up to around $100.
Those moves may appear extreme, but given the sheer scale of the actual supply losses – now topping some 600 million barrels – they look surprisingly restrained.
Indeed, prices paid by refineries for oil needed to make products such as gasoline, diesel and jet fuel have reacted far more forcefully. Dated Brent , which refers to the price of physical crude delivered to northwest Europe, is trading at $120 a barrel - about 65% above pre-war levels and the highest since 2022.
Other physical benchmarks have surged to record highs. North Sea Forties crude briefly hit a peak of nearly $150 a barrel on Monday. All this points to an acute supply shortage.
Courtesy: www.reuters.com
