Physical Crude Decouples From Futures

The price of physical crude oil has separated from futures contracts as shipping halts choke global supply routes. While benchmark futures remain below $120 a barrel, buyers are purchasing physical deliveries of Dubai crude above $150. This massive premium reflects an immediate physical oil shortage that maintains upward pressure on global shipping costs and inflation measures.

In normal market conditions, physical oil deliveries track near-term futures contracts with a standard adjustment for transport costs. Today, a stark gap divides the paper market from the physical market. While paper contracts tied to standard crude benchmarks have steadied under the $120 per barrel threshold, companies needing immediate, actual barrels are paying well over $150. A physical premium of more than $30 indicates that commercial buyers are pricing in an acute, present-day supply shock rather than relying on the longer-term stability implied by futures exchanges.

The physical squeeze stems from extended closures along major maritime transit routes. These bottlenecks are delaying the standard distribution of energy shipments and forcing commercial buyers to outbid each other for available supply. According to strategists at Rabobank, the timeline for restoring baseline shipping flows continues to stretch out. Current models suggest global seaborne crude and refined product volumes will reach only 80 percent of normal historical capacity by August.

This infrastructure disruption is forcing institutional analysts to revise standard pricing models significantly upward. Analysts now model the international benchmark Brent crude averaging $107 a barrel during the second quarter of 2026, easing to $96 in the third quarter, and finishing the year near $90. Projections for West Texas Intermediate follow a similar path, with the US benchmark expected to average near $98 a barrel in the second quarter of 2026 before slowly drifting down toward $77 in 2027.

Wide spreads between physical oil and futures indicate that global supply chains remain constrained. As energy and logistical costs rise, this pricing structure passes direct costs through to global consumer price indices. For central banks, these stubbornly high input costs complicate the environment for any monetary easing by maintaining underlying inflation pressures.