Physical oil hits fresh record high near US$150 a barrel as Strait of Hormuz crisis worsens

Liberia-flagged tanker Shenlong Suezmax, carrying crude oil from Saudi Arabia, that arrived clearing the Strait of Hormuz, is seen at the Mumbai Port in Mumbai, India. (AP Photo/Rafiq Maqbool)

LONDON — The price of physical crude oil cargoes for prompt delivery to Europe hit a record high near US$150 a barrel on Monday and those for Africa hit new peaks, according to LSEG data and traders, as the U.S. plan to blockade the Strait of Hormuz raised concern of a prolonged disruption to supplies.

The price of Brent crude futures - the benchmark price for oil in financial markets - rose six per cent for June delivery to more than $100 a barrel as the U.S. Navy prepared to block ships to and from Iran via the Strait of Hormuz after Washington and Tehran failed to reach a deal to end the war. That is still far short of Brent’s all-time high of $147 a barrel set in 2008.

However, the price of physical crude cargoes for immediate delivery is significantly higher as the effective closure of Hormuz since the war started on Feb. 28 has sent buyers in Europe and Asia scrambling to secure supplies. The outright price of North Sea Forties crude reached US$148.87 a barrel on Monday, LSEG data showed, exceeding its 2008 peak.

• Stay on top of your portfolio with real-time data, historical charts and the latest news on oil

The divergence highlights how strong demand from Asian and European refiners for non-Middle East barrels is driving up prices for replacement crudes that can be delivered soon, such as those in Europe and Africa. It also shows that disruption is expected to persist.

“Physical transactions are under a lot of strain,” the CEO of Spanish oil company Repsol, Josu Jon Imaz, said of the premium at which physical cargoes are trading to prices in financial markets, at an event on Monday.

Fuel prices soar, jet fuel supply crunch feared

Refined product prices have also soared. Jet fuel prices were off their record highs from a month ago but remain elevated, hovering near $200 a barrel and having almost doubled since the war started.

A similar picture has emerged for diesel. The price for diesel cargoes delivered to North West Europe reached around $170 per barrel on Friday, according to LSEG data, up from around $102 before the war started.

Prices for those two fuels have surged in particular because Europe is structurally short of them, meaning that its refineries produce less than the continent consumes and imports are needed to fill the gap.

In 2025, as much as 62 per cent of the EU-27 and the UK’s jet fuel imports came from the Middle East, and 42 per cent of their diesel, data from analytics firm Kpler showed, highlighting the scale of the challenge importers now face in trying to keep European airports, cars, and industries fed with fuel.

Europe’s airport industry group (ACI) has already warned that the continent could face a systemic jet fuel shortage in just three weeks unless the Strait of Hormuz reopens.

Other crude oil grade hit records

Forties and other physical crude cargoes in Europe and Africa trade at a differential to dated Brent, a physical benchmark for prompt cargoes. Dated Brent is trading over $20 above June Brent futures, according to LSEG data.

• Latest updates on investing here

In the North Sea, other major grades Oseberg and Ekofisk were also bid to fresh record premiums on Friday. U.S. WTI Midland crude delivered to Europe traded at a $21.85 premium to dated Brent on Friday, also the highest ever.

In West Africa, Nigerian Bonny Light and Qua Iboe crudes are being offered in excess of a $10 premium to dated Brent, a trader said, a record high for that grade.

(Additional reporting by Pietro Lombard and Seher Dareen. Editing by David Goodman, Louise Heavens and Susan Fenton)