From CNBC · Brian Sullivan · · 2m
Oil's real price is $30-$40 higher than the screen shows
Soaring shipping costs mean a barrel of oil actually costs $125 or more, not the futures price traders see.
In brief
Soaring shipping costs mean a barrel of oil actually costs $125 or more, not the futures price traders see. Physical oil delivery costs have surged tenfold, adding about thirty eight dollars per barrel to the real price of oil beyond what futures markets show. Originally reported by CNBC.
The gap between paper and reality
Oil futures prices on trading screens do not reflect what companies actually pay. Physical oil delivery costs far more than the contract price suggests.
Supertanker rates have exploded
A very large crude carrier chartered from the U.S. Gulf Coast to China cost seventy six million dollars last week. The same trip cost about seven point six million dollars less than one year ago.
That adds $38 per barrel
A supertanker holds about two million barrels. The charter price means each barrel costs about thirty eight dollars more than the oil itself.
Real oil price is $125 or higher
When you add shipping costs to futures prices, the actual cost of physical oil is about one hundred twenty five dollars per barrel or higher.
“Oil, in reality, is $125 per barrel or higher.”
Shipping premiums are here to stay
Oil volumes through Hormuz are near pre-war levels, but costs are not. Companies shipping by sea, rail or truck pay hefty premiums with no sign of decline.
Shipowners are cashing in
Stocks of shipping companies have surged this month and this year as charter rates remain elevated and demand for transport stays high.
Shell positioned to benefit
Shell is a major player in global energy with a huge liquefied natural gas business. The company hit a new high this week as analysts remain bullish.
LNG exporters gain from tight supply
European gas storage levels are below seasonal lows heading into winter. Shell, TotalEnergies and BP with U.S. LNG positions benefit from wider export margins to Europe.
Refiners enter a golden age
A diesel shortage is spilling over into gasoline. Morgan Stanley says this marks another leg of a golden age for refiners including ExxonMobil, Valero, Phillips sixty six and PBF.
Iran standoff expected to last
Tobin Marcus sees a prolonged standoff with Iran. The ongoing tensions continue to disrupt energy flows and keep shipping costs elevated.
Winter weather becomes critical
Europe's natural gas storage levels are lower than in past years. Temperature patterns in October and November will determine whether the continent safely weathers winter.
In short
Physical oil delivery costs have surged tenfold, adding about thirty eight dollars per barrel to the real price of oil beyond what futures markets show.
