The cost of immediate Brent oil supplies reached a maximum since 2008
While Brent crude oil futures prices have generally held in the $100-$112 per barrel range for three weeks, actual deliveries of physical oil with immediate shipment cost significantly more.
Oil terminals in London. Photo: Dan Kitwood/Getty Images
This is a result of a significant oil shortage at the moment and the expectation of de-escalation in the Middle East in a month or two, when deliveries under futures contracts are expected to take place, writes Moscow Times.
The cost of Dated Brent crude oil batches currently being sold and shipped in the North Sea reached $141.37, Bloomberg reports, citing S&P Global, which publishes these prices. This is not only higher than the levels observed after Russia's invasion of Ukraine in 2022, but also the highest since July 2008, when oil prices reached historical peaks before the start of the global financial crisis.
"Paper markets," meaning exchanges where futures contracts are traded, "have completely detached from physical markets," where current deliveries are made, described Jeff Currie, Director of Energy Strategy at Carlyle Group, to Bloomberg: "We're facing an incredible supply-side shock."
Before the war in Iran, Persian Gulf countries supplied about 20 million barrels of oil and petroleum products per day to the global market.
The reduction in exports due to the closure of the Strait of Hormuz was partially offset by Saudi Arabia, which rerouted oil through a pipeline to the Red Sea and brought supplies to 7 million barrels per day, and the UAE, which pumps 1.5 million barrels via a pipeline outside the Persian Gulf. However, more than half of pre-war supplies remain unavailable.