There are now two prices for oil. The one you see on financial news tickers -- Brent crude futures, the contract for delivery next month -- settled at $109.03 on Thursday. [1] The one you do not see unless you trade physical crude -- Dated Brent, the benchmark for actual barrels being loaded onto actual tankers -- hit $141.36. [2] The gap between them is $32.33. That gap is the story.

As this paper reported yesterday, Brent futures have been swinging between $100 and $110 in a pattern that reflects presidential statements more than supply fundamentals. The futures market is a bet on the next thirty days. Dated Brent is the price of oil right now, for delivery right now, to a refinery that needs it right now. The difference between $109 and $141 is the difference between expectation and reality. Reality is worse.

CNBC confirmed the $141 figure on Thursday, noting it was the highest Dated Brent level since the 2008 financial crisis. [2] The comparison to 2008 is precise and uncomfortable. In July of that year, physical crude hit $147 before the global financial system collapsed. The current surge has a different cause -- the Strait of Hormuz blockade rather than speculative excess -- but the destination is the same neighborhood.

The mechanics of the split are not complicated. Futures contracts allow traders to buy and sell oil that does not yet exist in a deliverable form. They are bets on direction. Dated Brent is the spot price for North Sea crude cargoes assessed by Platts, the commodity pricing agency, based on actual transactions between producers and refineries. [3] When physical barrels are scarce -- because a chokepoint carrying 20% of global supply is closed -- the spot price screams upward. Futures, which average out over time and reflect the market's guess about when the crisis will end, rise more slowly.

The $32 gap is called the "spread" or "premium" in trading language. In normal markets, it is a few dollars at most. A $32 spread has not been seen since the most extreme moments of the 2008 spike. Energy analyst Stuart Turley flagged the divergence on X, noting that the physical benchmark at $141 while futures hovered near $107 represents a "massive gap" that the headline price obscures. [4] UBS economist commentary confirmed the same: "Dated Brent is trading at $141 whilst what you normally see is the Brent Futures at $107." [5]

What does the split mean for consumers? The futures price is what financial media reports. It is the number on CNBC's ticker, the figure in the newspaper. But the physical price is what refineries actually pay for the crude they turn into gasoline and diesel. If a refinery pays $141 for a barrel, it prices its output accordingly -- regardless of what the futures screen says. The $7.559 diesel record in California is consistent with $141 physical crude. The $4.10 national gasoline average is consistent with $141 physical crude. The futures price of $109 is, in this sense, a comforting fiction.

Goldman Sachs had already raised its year-end Brent forecast to $130. BlackRock warned clients that $150 is possible if Hormuz remains closed through summer. [6] Those forecasts were based on futures. The physical market is already there. Dated Brent at $141 means the oil market has priced in the worst-case scenario for supply. It has not yet priced in the worst-case scenario for duration.

The Strait of Hormuz crisis is 37 days old. Iran's partial reopening for "essential goods" to its own ports has not eased the physical shortage. The Cape of Good Hope route adds 10-14 days to every tanker voyage. Every day the blockade continues, the physical premium widens, because there are fewer barrels available for immediate delivery and more refineries competing for them.

The futures market believes this ends. The physical market is not sure.

-- DARA OSEI, London