The price of dated Brent crude has surged to $131.97 per barrel amid ongoing tensions in the Middle East, raising alarms among energy analysts about persistent stress in the physical oil market. This spike follows a brief truce between the U.S. and Iran, but analysts warn that the underlying supply constraints remain unresolved, particularly due to disruptions through the critical Strait of Hormuz, which handles about 20% of global oil and gas traffic. The gap between dated Brent and front-month Brent futures indicates that tight supply conditions are likely to persist.

The current dynamics reveal a significant dislocation between physical and futures markets, with dated Brent reflecting immediate scarcity while Brent futures remain more stable. This disconnect has led to unusual trading patterns, with Brent futures experiencing a decline even as physical prices remain elevated. Experts suggest that refiners may delay purchases, exacerbating product tightness despite geopolitical de-escalation.

Market participants should closely monitor the evolving situation in the Strait of Hormuz, as continued operational risks could sustain elevated prices and volatility in the crude oil market, impacting trading strategies and portfolio allocations.

Source: cnbc.com