Physical oil prices hit record highs near $150 a barrel as Hormuz crisis worsens

European and ‌Asian refiners are paying record high prices of near $150 a barrel for some crude oil grades, far exceeding prices for paper futures, highlighting the worsening supply crisis from the U.S.-Israel war with Iran.

The Iran war has forced the shutdown of at least 12 ​million barrels per day – about 12% of world supply – from the Middle East due to Iran’s effective ​closure of the Strait of Hormuz. As a result, Brent oil futures reached $119.50 a ⁠barrel last month, the highest since 2022 although still short of the 2008 record high of $147.50. The nearby ​Brent contract is for June delivery.

Competition for supply from Asian and European refiners to replace disrupted Middle Eastern oil ​flows has helped to drive up the prices of replacement crudes for more immediate delivery, such as those in Europe and Africa.

As a result, some crudes are hitting records already. The outright price of North Sea Forties crude reached $146.09 a barrel on Tuesday, ​according to LSEG data, above the 2008 level and an all time high.

The main driver of prices such ​as that of Forties is “panic” over supplies, said Adi Imsirovic, a veteran oil trader. “When there is a real, physical shortage, people ‌are not ⁠thinking about July delivery – June loading and hence June futures prices – but oil NOW.”

The price of Forties and many other cargoes around the world is linked to the physical crude benchmark called dated Brent which is trading almost $20 higher than the price of Brent futures for June delivery according to LSEG data because it reflects the price ​of cargoes for immediate delivery.

“At ​the moment, the market is ⁠scrambling for prompt, refinery-usable barrels, and stress is appearing first in the part of the benchmark that is closest to the immediate physical problem,” Morgan Stanley analysts said ​in a report.

Oil price benchmark publisher S&P Global Energy Platts assessed the price of ​dated Brent ⁠on April 2 at $141.365, close to the record high of $144.22 in 2008, a Platts spokesperson said. Using the Platts dated Brent figure would put the price of Forties, and many other physical cargoes, well above $150.

Prices of refined products in Europe ⁠were ​close to record highs on Tuesday.

Jet fuel prices in Europe hovered at $226.40 ​a barrel, close to a record high hit in mid-March, LSEG data shows. Diesel prices were still shy of their record highs hit ​in 2022, standing at $203.59 a barrel on Tuesday.