A sharp divergence has opened between physical and paper oil markets: Europe's Dated Brent benchmark has pushed above $120 per barrel even as ICE Brent futures have eased toward $101. This gap points to genuine scarcity of deliverable physical barrels rather than a broad bullish shift in sentiment.
Several factors are cited as driving the squeeze: a release of European diesel stocks, reported drone attacks on tankers in the Strait of Hormuz, and China's reinstatement of a ban on refined product exports. Together these have disrupted the normal flow of physical crude and products even as futures markets remain comparatively calm.
For traders, the divergence between Dated Brent and ICE Brent complicates hedging and pricing of physical cargoes, since contracts referencing the physical benchmark will be settling at a significant premium to paper markets. Supply chain risk around the Strait of Hormuz and Chinese export policy adds further uncertainty to near-term crude and product availability, particularly for buyers in Europe and Asia reliant on seaborne cargoes.
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Original note by GIDEX Group based on reporting by Oilprice.com. Written up by the GIDEX market desk — see how these notes are made. Not investment advice.
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