Brent crude spot price hits a new high for 2008, and experts say: futures prices have not reflected the real situation

According to S&P Global’s latest data, the spot price of Brent crude has risen to $141.36 per barrel, setting a new high record since the 2008 global financial crisis. The core reason behind this price move is that Iran’s blockade of the Strait of Hormuz has led to severe short-term tightening in the global physical crude oil supply chain. Experts also point out that current futures prices do not reflect the underlying reality.

Brent crude spot price hits a new high since the 2008 global financial crisis

According to CNBC, the Brent crude spot price—reflecting recent delivery demand—has reached $141.36, setting a new high since the 2008 global financial crisis. At the same time, European diesel prices are also nearing $200 per barrel. These figures objectively show that, due to the direct impact of the Strait of Hormuz blockade, the global physical crude oil supply is facing a significant and immediate shortage. Compared with long-term price expectations, the near-term disruption to logistics and actual demand directly push up transaction prices in the spot market, highlighting the urgency of the current energy supply chain.

Futures prices fail to reflect the real situation

It is worth noting that the Brent crude spot price is $32.33 higher than the futures price for June delivery ($109.03). The phenomenon of the spot price being higher than the forward futures price in financial markets is called “backwardation.” This large spread indicates that the financial futures market has not yet fully priced in the impact of the disruption in physical supply.

Amrita Sen, founder of Energy Aspects, said in an interview with CNBC that futures prices “almost give a false sense of security, making people feel that things aren’t that tense.”

Industry experts noted that the relatively stable quotes in the futures market may mask the tight conditions in the physical oil market, causing some participants to underestimate the current supply pressure. And right now, European diesel prices are already approaching $200 per barrel.

This article, “Brent crude spot price hits a new high since 2008; experts say futures prices fail to reflect the real situation,” was first published on Lianxin ABMedia.