Physical oil squeeze emerges
Traders and refiners are competing for immediate barrels, with reports of physical crude shortages and prompt‑supply premiums that pushed some transactions as high as $140 per barrel. The same coverage noted oil trading above $100 as blockade and tariff threats heightened near‑term demand for physical cargoes. (economictimes.indiatimes.com) (indianexpress.com)
Oil buyers are paying far more for barrels they can load now than for oil futures, a sign that the shortage is in the physical market, not just on trading screens. (economictimes.indiatimes.com) Bloomberg reported on April 11 that some prompt cargoes traded as high as $140 a barrel, even as benchmark futures were lower, because refiners and traders were scrambling for crude available immediately. (economictimes.indiatimes.com) (bloomberg.com) That gap widened after disruptions tied to the Iran war and the closure of the Strait of Hormuz cut off at least 12 million barrels a day of Middle East supply, according to a Reuters report published April 7. (money.usnews.com) Physical oil is the crude that refiners can actually run through their plants now; futures are financial contracts for delivery later. Dated Brent, a key price for real cargoes in the Atlantic market, rose above $140 on April 2, the highest level since 2008, Bloomberg reported. (bloomberg.com) The squeeze spread beyond the Middle East within days. Reuters reported on April 6 that spot premiums for United States West Texas Intermediate crude hit record highs as Asian and European refiners competed for replacement barrels. (money.usnews.com) Oil futures then jumped back above $100 a barrel on April 12 and April 13 after peace talks failed and the United States moved toward a blockade of Iranian ports, adding a fresh geopolitical premium on top of the physical shortage. (money.usnews.com) (cnbc.com) (apnews.com) Indian Express, citing the market reaction on April 13, said oil traded above $100 as blockade and tariff threats lifted demand for prompt cargoes and rattled Asian markets. (indianexpress.com) The stress is hitting smaller refiners hardest because they must pay more cash upfront for crude and hedge larger price swings between physical barrels and paper contracts. Bloomberg said some plants may cut runs, which would tighten diesel and jet fuel supply next. (economictimes.indiatimes.com) (bloomberg.com) Banks and analysts are not reading the market the same way. Goldman Sachs cut its second-quarter 2026 forecasts to $90 for Brent and $87 for United States crude after a two-week ceasefire was announced on April 9, even as physical prices stayed far above those levels. (msn.com))) For now, the clearest signal is not the headline futures price but the premium on cargoes that can move immediately. As long as refiners keep bidding up those barrels, the market is saying the shortage is here, not later. (bloomberg.com)
