Global oil market races to secure supply amid Middle East tensions

As attention turns to a fragile ceasefire in Iran, the global physical oil market is undergoing a rapid scramble for readily available crude cargoes, with traders and refiners bidding aggressively for delivery in the coming weeks.

Bid-ask pressure and record levels in physical markets

Off the North Sea, the world’s most important oil market, traders placed 40 buy orders this week but only four received bids from sellers. Cargoes with delivery in the coming weeks traded at unprecedented levels, above $140 per barrel.

Elsewhere, refiners have been forced to source from farther afield, contributing to unusual deal patterns and sharply widening bid-ask spreads for cargoes available for immediate delivery. Market participants say these moves point to a tightening crude supply that is likely to become more evident in the coming weeks as Middle East-related disruptions widen the gap.

Potential crude rebalancing, but risks for key products

Analysts have suggested that the price surge could lead some European refineries to cut output, similar to actions taken by refineries in Asia. While such adjustments could help rebalance the crude market, it would likely worsen shortages of essential products including diesel and aviation fuel.

Hormuz Strait activity remains below pre-conflict levels

Shipping through the Hormuz Strait showed signs of increased activity toward the end of the week, including two Chinese VLCCs and a Greek-flagged vessel transiting. However, overall traffic remains well below pre-conflict levels.

Experts warned that even if weekend talks restore normal flows through the strait, Asian and European markets would not be immune to near-term shortages. They noted that crude from the Gulf takes weeks to reach refineries in Asia and Europe.

“40-day gap” and the value of immediate supply

In a LinkedIn post, Sultan al Jaber, CEO of Abu Dhabi National Oil Company (ADNOC), said the last cargoes to pass through the Hormuz Strait before the current conflict began are now arriving. He said the 40-day gap in global energy flows is now clearly apparent.

This gap is reflected in the bid-ask spreads refiners are willing to pay to secure immediate crude supplies. Some traders at Asian refineries said they no longer focus on price and instead aim to buy any available crude to protect energy security.

Brent spot and futures diverge

Spot Brent rose to an all-time high of about $144 per barrel before the ceasefire, while futures prices remained well below that level. In the latest session, the price fell to around $126 per barrel but stayed about $30 above the Brent futures price for June delivery.

Shifts in buying patterns across Asia and the United States

Asian nations, which rely heavily on Hormuz for supply, are seeking crude globally rather than limiting purchases to traditional sources. Japanese refiners are leading a wave of purchases from the United States, which is currently exporting at record levels.

China’s oil-buying has also increased tanker traffic, with shipments from Vancouver, Canada reaching record highs this month. At the same time, Indian refiners have stepped up purchases from Venezuela. In the first week of April, tanker loads of crude for India totaled nearly 6 million barrels—more than double the volume recorded in March.

Speed premiums and concerns about U.S. supply

With the focus on supplies that can be delivered quickly, refiners are paying up for speed. Japan has even ordered smaller-than-usual vessels to carry U.S. crude, enabling faster transit through the Panama Canal to reach Japan.

On April 11, U.S. President Donald Trump said many oil tankers are heading to the United States to receive crude. Midland WTI at the Houston terminal (often referred to as MEH) is trading at nearly $4 per barrel above the U.S. benchmark. The premium has widened about fourfold since the conflict began, reflecting the value of time saved—crude is already available in Houston rather than taking about five days to transport from elsewhere.

Amrita Sen, co-founder of Energy Aspects, warned that as buyers rush toward the United States, the country itself could soon face shortages. She said tight physical markets are likely to persist, with U.S. producers continuing to push exports to take advantage of high prices, potentially leaving domestic refiners short of crude.