MW Real-world oil prices just hit a record high, signaling acute stress in the energy market
By Isabel Wang
As Trump's Iran deadline looms, the physical oil market is flashing something far more serious than currently reflected in futures contracts
The physical oil market is flashing something far more serious than currently reflected in futures contracts.
When oil prices flash across a terminal or a news ticker, they usually reflect a market dominated by financial traders betting on future barrels of crude. Yet a murkier market, where tanker cargoes change hands in the physical world, is telling a more pressing story about the tightening of global oil supplies since the start of the Iran war.
Dated Brent tracks prices of physical cargoes of crude oil in the North Sea being loaded onto ships. It reached a record level of $144.42 per barrel on Tuesday afternoon - surpassing levels seen when Russia invaded Ukraine in 2022 and during the 2008 global financial crisis, according to data compiled by Platts, a division of S&P Global.
The prices are based on actual bids, offers and transactions between buyers and sellers in the open physical spot market for Brent crude oil, reflecting a real-world price tag for oil based on supply-and-demand dynamics at a given moment.
That contrasts with Brent crude futures (BRN00), where the closely followed contract for June delivery (BRNM26) hovered at around $110 a barrel on Tuesday, below its highest level since 2022. The June contract is currently the closest to expiration, which typically makes it the most actively traded and a proxy for real-time global crude prices. Despite the Iran oil shock, global futures remain well below their $147 peak set in 2008, according to Dow Jones Market Data.
Lower prices for Brent futures suggest traders in the "paper" oil market, where contracts are settled financially on a set date, anticipate a relatively quick end to the Iran conflict. Higher prices for "physical" oil barrels, however, point to a more dire situation for buyers with immediate crude needs.
The gap in prices between Dated Brent for April delivery and Brent futures for June delivery is reflected in the below chart. The difference, or spread, has increased since the blockade of the Strait of Hormuz after the U.S. and Israel attacked Iran on Feb. 28.
SOURCE: SG CROSS ASSET RESEARCH/COMMODITIES, BLOOMBERG
Higher Dated Brent prices show "the system is running out of buffer and the physical market is now signaling acute stress," said a team of strategists at Société Générale led by Mike Haigh, head of fixed-income and commodities research.
"Early-March inventory cushions are thinning, and vessels that slipped out preconflict have now discharged," they wrote in a Tuesday client note.
See: Global oil stockpiles could sink to critically disruptive levels soon, sparking more shortages
Before the Iran conflict, the global oil market was facing a glut, with the International Energy Agency estimating supply could have exceeded demand by nearly 4 million barrels per day in 2026 - a record annual surplus. However, those stockpiles have been drawn down steadily over the past month.
"Inventories only stabilize the system to a point - below which market functioning begins to deteriorate," the Société Générale team said. "With little buffer left, the system is increasingly exposed to further disruptions."
Consumers could be hit even harder
When prices for physical oil greatly exceed futures contracts, it can quickly filter through to fuel costs, raising gasoline and diesel prices and directly affecting U.S. consumers, said Ben McMillan, chief investment officer at IDX Advisors.
Dated Brent is "where the rubber meets the road," and consumers could be hit even harder, McMillan told MarketWatch on Tuesday. He foresees Brent futures surpassing $150 a barrel if a deal isn't reached between the U.S. and Iran to reopen the Strait of Hormuz to shipping and tanker traffic, while physical Brent could possibly trade even higher.
"The market is now understanding that this can get a lot worse in the coming weeks, and oil at $150 would not surprise me - that is certainly within the cards," he said.
Oil prices climbed Tuesday in the hours before President Donald Trump's unilaterally imposed 8 p.m. Eastern time deadline for Iran to reopen the strait. Trump has repeatedly threatened to attack Iran's civilian infrastructure in recent days, which could be considered a war crime under international law. Talk of such actions has received bipartisan criticism among U.S. lawmakers.
See: Stocks fall as Trump's Tuesday night deadline for Iran looms: 'The market is certainly on edge'
U.S. benchmark West Texas Intermediate crude for May delivery (CL.1) (CLK26) was up nearly 0.5% to settle at $112.95 a barrel on Tuesday - the highest level since June 16, 2022, according to FactSet data.
-Isabel Wang
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 07, 2026 16:50 ET (20:50 GMT)
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