Brent Crude closed at $112.19 on Thursday — up from the $108.65 settlement earlier in the week and 66% above the pre-war $67.41. The price has climbed in every sustained period since hostilities began on 28 February. But the benchmark number understates what buyers are actually paying for physical crude.
Bloomberg reported a $14.20-per-barrel premium on spot physical barrels over next-month futures — the widest backwardation in the history of the Brent contract1. At that spread, refiners are paying an effective $126 or more per barrel for immediate delivery rather than waiting even one month for cheaper futures-dated crude. Futures markets price expectations; spot markets price what is available now. The record gap between them is a measure of physical scarcity, not speculative positioning. When refiners accept a $14 surcharge to skip the queue, the queue itself is the story.
Iraq's declaration of Force majeure on all foreign-operated oilfields — dated 17 March — removed roughly 3.3 million barrels per day of pre-war export capacity from a market already short from the Hormuz disruption, where Gulf exports have fallen at least 60% since late February. Iraqi storage hit capacity; production cuts followed. Daan Struyven, Goldman Sachs's head of oil research, warned Brent could exceed its 2008 all-time intraday record of $147.50 if Hormuz flows remain depressed for 60 days2. Three weeks have elapsed. Ann-Louise Hittle of Wood Mackenzie and Vandana Hari of Vanda Insights have both forecast $150 or higher.
US gasoline stood at $3.84 per gallon before Thursday's close — up $0.86 from pre-war levels. Diesel had crossed $5.00, its highest since 2022. With spot crude effectively at $126, retail fuel prices have not yet caught up to the physical market. Chatham House assessed that if the conflict persists for months, Brent could reach $130 and the eurozone would "probably" contract in Q2. Every week the Hormuz disruption continues, the distance between those forecasts and observed prices narrows.
