Quick overview

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S&P Global data showed the spot price for current physical Brent crude oil surged on Thursday to $141.36, the highest level since the 2008 financial crisis.

The demand for Brent oil delivered within the next ten to thirty days is reflected in the spot price. There is currently a tight physical supply due to the significant disruption caused by Iran’s closure of the Strait of Hormuz, which is indicated by the high cost of more immediate oil deliveries. The price was $32.33 more than the June delivery

Brent crude futures contract, which ended Thursday at $109. Amrita Sen, the founder of Energy Aspects, stated that the futures price is “almost giving a false sense of security that things are not that stressed.” Sen remarked, “You are seeing it, but the financial market is almost hiding the true tightness that is showing up everywhere else.” A barrel of diesel currently costs close to $200 in Europe.

Mike Wirth, CEO of Chevron, issued a warning last week that the futures price does not accurately reflect the extent of the disruption to the oil supply caused by the Strait’s closure. According to Wirth, the market is based on “perception” and “scant information.”  Wirth stated, “There are very real, physical manifestations of the closure of the Strait of Hormuz that are working around the world and through the system that I don’t think are fully priced into the futures curves on oil.”