This paper reported Sunday that physical crude and futures were pricing two incompatible realities — Dated Brent at $132, futures at $97, and a $35 gap that suggested the physical market did not believe the financial market's timeline for resolution. Day One of the blockade made that gap wider.

Brent crude futures fell to $97.42 on Monday, a five-percent drop driven by traders who expected a hard blockade and got a selective one. [1] The Rich Starry turned back but the Elpis sailed through. Saudi Arabia confirmed its East-West pipeline running at seven million barrels per day. OPEC+ signaled willingness to accelerate production increases. [1] Futures traders read all of this as evidence that the crisis is negotiable.

Physical traders disagreed. Dated Brent for immediate loading remained elevated, with European refiners still paying near-record premiums for any barrel that can actually be delivered. [2] The insurance market — Lloyd's and the International Group of P&I Clubs — pulled war-risk coverage for Hormuz transits, meaning most charterers cannot legally move cargo through the Strait regardless of whether the Navy lets them pass. [3] A ship without insurance is a ship without cargo, and that constraint operates independently of CENTCOM's enforcement choices.

The result is a spread that moved from $35 on Friday to something larger on Monday, though exact Dated Brent settlement data lags by a day. The futures market fell because it saw a softer blockade. The physical market held because it saw 800 stranded ships and an insurance market that has effectively closed the Strait on its own terms. [3]

Two prices. Two verdicts. The gap between them is the market's measure of uncertainty.

-- DARA OSEI, London