There is a severe dislocation between what markets expect in terms of oil supply, and the state of the current physical market.
Currently, bidding for real, physical barrels has driven prices to record highs. Today.
Futures markets continue not to price this in, leaving refineries high and dry when they have to secure physical barrels on the spot market that they didn't cover for on the futures market. This will leave many refineries in a credit distressed state if this persists.
This, in my opinion, is what happens when market participants like refineries look at and take seriously all the wrong indicators (Truth Social), instead of the right ones (shipping flows).
Any oil traders that can take physical delivery in the futures markets stand to gain by arbing the futures/spot price spread each month Hormuz stays shut.
Oil price dislocation: Spot physical vs futures
byu/ub3rm3nsch inoil
Posted by ub3rm3nsch
4 Comments
You can take deliveries of oil by buying futures right? Aren’t governments shorting futures? So governments are subsidizing oil to make it this cheap.
The [black knight](https://youtu.be/ZmInkxbvlCs?si=1h_PzYeVK3Vqh78G) oil market.
You are free to buy the futures and take delivery transport them to where the spot prices are higher and sell for that higher price.
You’d lose an unimaginably large amount of money trying to do so, but you’re free to try.
Oil prices with cataclysmic, record breaking supply disruptions that threaten the functioniong of entire nations: I sleep
Oil prices when Russia invades Ukraine: REAL SHIT