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strikeApr 13, 2026

Why oil prices aren’t what you think – and what it means for global supply

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Why oil prices aren’t what you think – and what it means for global supply Growing gap between physical and on-paper oil prices points to more serious energy shock than appreciated, analysts say. Oil prices have dominated headlines and policy discussions since the start of the US-Israel war on Iran. In the six weeks since the United States and Israel launched strikes on Iran, crude prices have risen sharply, driving up fuel costs and placing strain on households across the globe. Recommended Storieslist of 4 items - list 1 of 4Peter Magyar says his election win has ‘liberated Hungary’ from Orban - list 2 of 4Golf: Rory McIlroy fourth player to win consecutive Masters - list 3 of 4US military threatens to blockade all Iranian ports starting on Monday - list 4 of 4Oil prices surge past $103 a barrel after US announces blockade of Iran On Sunday, the main international benchmark for prices surged more than 8 percent to top $103 a barrel after US President Donald Trump announced plans to impose a naval blockade on Iran. In fact, the price of oil is more complicated than any one figure and depends on where you look. The oil trade can be broadly divided into two distinct markets: physical sales and contracts for future oil deliveries, known as futures. Since the start of the war and Iran’s effective blockade of the Strait of Hormuz, prices in these markets have diverged substantially – reflecting what analysts say is a growing mismatch between perceptions of supply and the reality on the ground. Here is all you need to know about the growing split in the physical and on-paper oil markets: What is the difference between physical and futures oil prices? Oil is priced differently depending on whether it is bought on the spot for prompt delivery or months in advance via a futures contract. The principal benchmark for spot prices is Dated Brent, a basket of four grades of oil produced in the North Sea and one produced in the US. It reflects the per-barrel price of oil scheduled for shipment in the next 10 to 30 days. “If someone wants oil for immediate delivery – rather than in the future – what matters is the spot price,” Pavel Molchanov, an investment strategist at Raymond James & Associates, a financial services firm, told Al Jazeera. Brent futures are financial derivatives that reflect the price of oil due to be loaded months or even years from now. The primary benchmark is the front-month Brent Crude Oil Continuous Contract, which currently refers to deliveries due in May. In simple terms, Dated Brent reflects short-term demand, whereas Brent futures are a barometer of future price expectations. The futures price is the price most commonly found in news reports and search engine results. What has been happening to prices? Iran’s effective shutdown of the Strait of Hormuz, which normally carries about one-fifth of global oil supplies, has caused one of the biggest energy disruptions in history. Despite the existence of a fragile ceasefire between Washington and Tehran since early last week, only 17 vessels transited the strait on Saturday, according to maritime intelligence firm Windward, down from roughly 130 daily transits before the war. While countries such as Saudi Arabia have boosted alternative supply routes, the global economy is still facing a daily shortfall of about 8 million barrels of oil, according to a recent estimate by market intelligence provider Kpler. Depending on whether your reference point has been real-world transactions or electronic trades, the surge in prices prompted by the supply crunch has looked markedly different. While it is not unusual for spot and futures prices to differ, the gap between the two has widened well beyond what is typical since the conflict began. Dated Brent last week hit an all-time high of more than $144 a barrel – about $35 above the price of Brent futures. While the gap is continuously fluctuating, the spot price has remained considerably higher than the futures equivalent since then. The spread indicates that oil supplies are becoming increasingly scarce on the ground, to an extent greater than suggested by the relatively modest price increases captured in headlines. “Under ordinary circumstances, the spot price and front-month futures price are roughly equal, because oil today carries little to no extra value as compared to oil one month from now,” said Molchanov. “But the fact that the Strait of Hormuz remains at a near-standstill means that the oil market is facing a physical supply deficit right now – so buyers are currently willing to pay a hefty premium for oil that is available right away.” Adi Imsirovic, a veteran oil trader who lectures at the University of Oxford, said the extent of the energy shock has not been fully appreciated by policymakers. “I think most governments are complacent regarding this energy shock,” Imsirovic told Al Jazeera. “They should be giving advice to citizens [on] how to ration energy, thus reducing unnecessary waste. Eventually, prices will have to do the work.” Why are the two prices diverging so much? While it is notoriously difficult to pin down the workings of the market, analysts say traders have been betting on a resolution to the crisis down the track. “Futures markets have not always followed spot prices due to the uncertainty of [the] Trump administration. TACO has always been lurking in the minds of traders, making it risky to hedge with long oil positions at high prices,” Imsirovic said, referring to the acronym for “Trump Always Chickens Out”, a description of the US president’s perceived tendency to backtrack on threats and controversial policies. Molchanov, the strategist at Raymond James & Associates, said the return of price stability will depend on Iran easing its control over the strait and shipping companies gaining confidence that it is safe to transit. “Putting both of those dynamics together, we envision a two to three month period of recovery in traffic, with improvement starting off slowly and then accelerating,” he said. “As more tankers enter the Gulf, there should be a commensurate recovery in oil exports.”

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The White House is now apparently using Russian tactics to convince the American public that the war in Iran is not, in fact, a war. When asked by reporters at the White House on Thursday whether the most intense sustained air campaign by American forces since the invasion of Iraq would be over by the midterms, Vice President JD Vance replied: “I wouldn’t call it a war.

” Vladimir Putin said much the same thing when he invaded Ukraine. Russia was not fighting a war either, the Kremlin insisted; it was merely conducting a “special military operation.” If that comparison strikes you as shocking, consider the contours of the two conflicts.

A vastly more powerful military launched a punishing offensive against a smaller, less well-equipped adversary, inflicted enormous damage without achieving a decisive resolution, and then found itself drawn into a longer, grinding conflict with no clear way out.

The motivations behind the wars may be different, and they’re playing out in different theaters, but the pattern is eerily similar. Now, so too is the attempt by those in power to control how the public understands, and even what it is allowed to call, the obvious war unfolding in front of them.

If This Isn’t a War, What Is? Let us take a moment to assess what exactly has happened since February 28, when the U.S. launched Operation Epic Fury. The opening U.S.-Israeli attack killed Iran’s supreme leader, Ali Khamenei, along with the commander of the Revolutionary Guard, the defense minister and various other senior officials.

According to the U.S. military’s own accounting, the first 38 days of major combat operations involved more than 10,200 sorties and 13,500 strikes. U.S. Central Command (CENTCOM) says those attacks damaged or destroyed more than 85 percent of Iran’s ballistic missile, drone and naval defense industrial base, while knocking out 82 percent of its air-defense missile systems.

The U.S. sent carrier strike groups and warships into the region, later imposing a military blockade on Iranian ports. Meanwhile, American and allied air defenses intercepted more than 6,000 Iranian attack drones and 1,500 ballistic missiles fired at U.

S. forces, Israel and American partners across the Middle East. More than 50,000 U.S. service members remain deployed across the region. The fighting has killed 18 U.S. service members and at least 8,000 people across Iran, Lebanon, Israel and the Gulf states.

More than 750 U.S. service members have been wounded. Last month, during a lull in the fighting, the U.S. Treasury unveiled a sanctions package likened to an “economic D-day” that is designed to make Iran an “economic outcast” and cut the adversary off from all available forms of economic support.

In the announcement, Treasury Secretary Scott Bessent openly declared that Iran had been “at war against America” for 47 years. This week, the shooting resumed; the U.S. hit targets in and around the Strait of Hormuz, and Iran blasted missiles at targets in Kuwait, Bahrain, Jordan and Iraq.

All this from an administration that almost exactly a year ago launched a rapid rebrand of the Defense Department into the “Department of War”. No boots on the ground, though, so it’s not a war, right? Tell It Kind of Like It Is Even the very best snake-oil salesman would have a hard time convincing people that the war in Iran isn’t a war.

So why is JD Vance even trying? Well, if there’s one thing politicians understand better than anyone, it’s the importance of language and rhetoric. Words have immense power; a well-written speech can unite millions of people, and a catchy slogan like Make America Great Again can come to represent an entire political philosophy.

But war is a pesky word. For one, it implies there will eventually be a winner and a loser. It also brings with it certain expectations—and some very difficult questions. What is the objective? How many people will die? When will it end? And, perhaps most dangerously of all: was it worth it?

Those are not questions the White House wants Americans to be asking. Trump built a substantial part of his political identity around ending, rather than beginning, America’s “endless wars.” When Washington and Tehran signed a memorandum of understanding in June, the White House presented it as proof that Trump’s America First approach could deliver peace without another prolonged Middle Eastern conflict.

Then the hostilities started again. Earlier this week, Trump shared a Truth Social graphic declaring that “Hormuz Oil Volumes are BACK!”, saying 18 million barrels a day were once again leaving the Strait, compared with 20 million before the war. No independent commodity tracking company or energy analyst appeared to verify Trump’s claims.

But most Americans won’t be checking tanker-tracking dashboards. What they’ll care about is the cold, hard fact that diesel hit a new record price this morning, soaring to an average of $5.85 a gallon for the first time ever. Gasoline is $4.15 a gallon on average, compared with $3.

20 at this time last year, according to AAA. The numbers on the sign at the gas station and the price on the grocery receipt aren’t affected by Trump’s tall tales, but they’ll surely affect how Americans vote at the midterms. When viewed in this light, Vance’s attempt to discourage reporters from “call[ing] it a war” begins to make sense.

A war is something that we want to end. It tends to result in a winner and a loser. And its worth is up for debate at all times. A different kind of engagement that doesn’t quite meet the threshold of war—say, a special military operation—is not exposed to the same kind of scrutiny.

Vance effectively made that case himself. “When you ask, ‘When will this end?’ You’re asking me a question like, ‘When will the Iranians stop shooting at ships?’” he said. By that logic, there is no American war—only recurring Iranian provocations that require American military responses.

That’s exactly the logic applied by Putin to Ukraine and supposed expansion of NATO. Putting the Toothpaste Back in the Tube U.S. lawmakers have repeatedly invoked the War Powers Resolution to challenge Trump’s authority to keep fighting Iran without specific congressional authorization.

The law generally gives a president 60 days after U.S. forces enter “hostilities” to secure congressional approval or bring those hostilities to an end. That makes the pauses in fighting hugely important. When the original 60-day deadline arrived in May, Trump told Congress that the temporary ceasefire reached in April meant the hostilities that began on February 28 had ended.

Defense Secretary Pete Hegseth argued that the War Powers clock could “pause, or stop” when the shooting did. That position is disputed by legal experts, but its political utility is obvious. If every new outbreak of fighting can be treated as a separate skirmish, rather than part of one continuous war, the administration can argue that a fresh 60-day clock starts each time.

Vance’s insistence that there is no continuing “war” fits neatly for an administration that has already tried to divide six months of conflict into separate periods of hostilities, interrupted by ceasefires and pauses. This brings us back to Moscow.

The Kremlin’s own linguistic trick was also about making one sprawling war sound smaller, more limited and more manageable than it really was. From the very beginning of the invasion, Putin described the war as a special military operation. Only after two years of grinding warfare did Kremlin spokesman Dmitry Peskov openly declare Russia to be in a “state of war”—and even then, he said the transformation had occurred because the “collective West” had joined the fight against Russia.

Vance is playing a similar game, but in reverse. Only now—with soaring fuel prices, mounting casualties, concerns over the military’s munitions stockpiles, and midterm elections on the horizon—is the conflict no longer a war. You can’t put the genie back in the bottle, though, and the American people aren’t stupid.

Vance and the White House may discover in November that voters are perfectly capable of recognizing a war, even when the vice president doesn’t want to call it one.

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