The supply crisis in the Strait of Hormuz sends shock waves! Global traders are scrambling to secure crude oil, but is it available? –

The shock waves from the supply disruption in the Strait of Hormuz rippled through global oil markets, setting off a frenzied crude oil rally. As availability dwindles, refiners and traders scramble against time to secure cargoes that can be delivered without delay, intensifying competition for every available barrel.

Of the 40 bids submitted for shipments, only four were matched, with near-term delivery deals exceeding $140 per barrel, an unprecedented level.Moreover, the pressure is not limited to one area. According to Bloomberg, refineries are increasingly turning to remote and unconventional sources, highlighting the size of the supply gap expected in the coming weeks. The disruption stems largely from reduced flows from the Middle East, which has led to a growing shortfall in global crude availability.

“There is simply a shortage of crude oil,” Neil Crosbie, head of research at Sparta Commodities AS, told the Financial Daily. He added, “Physical Brent crude is a mess and has now risen a lot. At this rate, even European refiners will be forced to reduce usage, perhaps as early as next month.”Rising crude oil costs now force difficult choices. Traders point out that European refiners may soon be forced to follow their Asian counterparts in reducing their operations, a move that may stabilize crude oil markets but exacerbate shortages in key fuels such as diesel and jet fuel.

Futures slide even as physical prices riseThe tightness of physical supply contrasts sharply with movements in futures markets. While spot crude oil prices rose, futures for June delivery fell 13% this week, settling at around $95 a barrel, buoyed by hopes surrounding a ceasefire involving Iran.Although there were early indications of tanker movement through the Strait of Hormuz over the weekend, overall traffic remains well below pre-conflict levels.

Even if flows fully resume, any relief will take time to materialize, with shipments from the Gulf requiring weeks to reach major refining centers.“The final shipments that crossed the Strait of Hormuz before the conflict are now arriving at their destinations,” said Sultan Al Jaber, CEO of Abu Dhabi National Oil Company. “This is where markets traded on paper meet physical reality, and the 40-day gap in global energy flows is truly exposed.”

he said in a LinkedIn post on Thursday.The widening gap between spot supply and future expectations is also reflected in pricing standards. Dated Brent crude, the main benchmark for crude oil, rose to a record high of $144 a barrel earlier in the week before falling to $126 by Friday. Even then, they remained more than $30 higher than June futures.At the same time, insurance premiums for express shipments have risen sharply. Traders including Trafigura Group and Gunvor Group are offering $22 above dated Brent crude for North Sea shipments scheduled for late April and early May.

Nigerian shipments for next month have been priced at up to $25 above the record price, compared to less than $3 before the Iranian conflict began.Global trade flows are shifting as buyers scramble for supplyThe search for crude oil has also redrawn global trade patterns.Asian buyers, especially those relying on the Strait of Hormuz, are diversifying their sources of supply. Japanese refiners are increasing their purchases from the United States, as exports have reached record levels.

Chinese demand pushed shipments from Vancouver to a new monthly peak, while Indian refiners expanded imports from Venezuela. In the first week of April alone, nearly 6 million barrels were loaded for India, double the volume recorded during the same period in March.Speed ​​of delivery has become a critical factor. Japanese buyers are choosing smaller ships to transport US crude, allowing them to pass through the Panama Canal and reducing transit times.On Saturday, US President Donald Trump posted on social media news about the “huge numbers” of oil tankers heading to the United States to load their oil. Meanwhile, West Texas Intermediate crude at Midland in Houston rose to a premium of about $4 a barrel over the US benchmark, about four times what it was before the conflict, reflecting the added value of faster access to supply.Refineries are facing pressure due to rising costs and supply gapsThe current market structure, where spot delivery commands higher prices than futures contracts, is putting significant pressure on refiners.

Smaller operators, in particular, face increasing financing costs and difficulties in managing price risk, as the cost of physical crude oil far exceeds the cost of benchmark derivatives.“It’s a big headache to manage price risk – on paper the margins are great, but the real cash flows for buying goods and deciding to refine them can be very different,” Bloomberg quoted Roberto Oliveri, a consultant at Midhurst Downstream and a former refining economist at Saudi Aramco, as saying.As a result, some refiners have begun to withdraw from the market, which may further reduce the supply of refined fuels. Jet fuel and diesel prices have already risen above $200 a barrel, while U.S. gasoline inventories have fallen to their lowest level in nearly 16 years, according to the Energy Information Administration.With demand shifting increasingly toward US supplies, analysts warn that the pressure could soon extend there as well.“Physical markets are not taking their cues from social media,” said Amrita Sen, co-founder of consultancy Energy Aspects. “Instead, they have inexorably strengthened as disruptions spread from Asia to the Atlantic Basin.” “If futures do not keep pace with physical realities, US exports could easily remain elevated, ship availability permitting, to the point where there is not enough crude oil left for US refineries.

” With the war in the Middle East still ongoing and peace talks unresolved, uncertainty continues to grip the region. US Vice President J.D. Vance said that peace talks with Iran in Pakistan failed after more than 20 hours of negotiations. He added that the United States entered the talks “in good faith” but was unable to reach an agreement with Tehran.