Prices for physical oil deliveries in Oman have surged to $154 per barrel

The global energy market is seeing an unprecedented gap between futures prices and actual physical deliveries of raw materials. 

The Financial Times reports on this.

While May Brent crude oil futures are trading around $114 per barrel, spot oil shipments in some regions have already surpassed the $150 mark. While Russia attempts to use energy blackmail to destabilize the West, the escalation in the Middle East and the blockade of the Strait of Hormuz are creating an acute physical shortage of the resource on the global market.

According to Argus Media, Omani crude, whose ports have direct access to the ocean bypassing the blocked strait, was trading at nearly $154 per barrel on Tuesday. Experts at Saxo Bank note that the financial market and the physical supply market have effectively diverged in their assessments: futures traders are hoping for an improvement in shipping conditions by May, while oil refineries, which need raw materials “here and now,” are forced to pay huge premiums for available fuel.

Analysts highlight several key factors behind the current price surge:

• a physical shortage of oil due to the blockage of key sea routes;

• high logistics and cargo insurance costs in conflict zones;

• excess demand for oil shipments from ports with direct access to the open ocean;

• speculative pressure amid expectations of further escalation in the Middle East.

The situation with the critical rise in prices of physical oil shipments is putting additional pressure on the global economy and fueling inflationary trends in most importing countries. The acute shortage of “black gold” in the short term is forcing the governments of leading nations to seek alternative sources of supply and consider releasing strategic reserves. Future price dynamics will depend on the international community’s ability to ensure the safety of shipping in the crisis-stricken region.