The Strait of Hormuz remains "unopened," and the "world's most important spot oil price" has risen to $147, setting a historic record!

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The ceasefire agreement has not cleared critical shipping lanes, sending the physical oil market into a supply crisis.

On Thursday, as European and Asian refiners scrambled for North Sea spot crude, the benchmark price for North Sea Forties Blend surged to nearly $147 per barrel. According to LSEG data, this price has surpassed the historical peak set on the eve of the 2008 financial crisis.

At the same time, the price spread between North Sea spot and the June Brent futures contract (trading at $97 per barrel) widened to over $30, a rare divergence that directly reflects the market’s deep panic over spot shortages.

According to a Goldman Sachs report to clients, oil exports through the Strait of Hormuz have continued to decline recently and are now only 8% of normal levels. After the ceasefire announcement, very few ships have been passing through the strait, and most are linked to Iran.

Market Liquidity Experiences Rare Breakdown

The buying spree in the spot market has spilled over into the derivatives market, causing structural anomalies.

According to traders, as the price gap on Brent Contract for Difference (CFD)—which tracks the spread between spot and forward delivery prices—surged past $30 per barrel, exceeding the Intercontinental Exchange (ICE) threshold, next week's Brent CFD contracts can no longer be traded normally. ICE, the main oil exchange in Europe, did not respond to requests for comment.

Brent CFDs are widely used in the market to hedge against rising oil prices. Multiple market participants stated they cannot recall previously being unable to trade Brent CFDs, and some trades have been forced to move off-exchange.

Helima Croft, Global Head of Commodity Strategy at RBC Capital Markets, called the futures market price "a lagging indicator of the reality in Middle Eastern physical markets."

Physical Market: Shortages Are Now a Reality

The core of this crisis is not just price increases, but the breaking down of physical supply.

Former U.S. President Biden’s energy advisor, Amos Hochstein, warned: "If this situation continues for several more days, the market may judge the Strait of Hormuz as indefinitely closed. This will not only push up prices but may also spark a crisis in Asia."

He further pointed out: "This is not just a matter of high oil prices, but a very real physical shortage, and it is happening."

Asia is especially vulnerable—about 80% of its needed oil and petroleum products must be shipped through the Strait of Hormuz.

Dennis Kissler, Senior Vice President of BOK Financial’s trading division, stated that tight supply in the physical market "will continue until ships can again pass through the Strait of Hormuz." He added: "Even if the strait is reopened, it will take 20 days to resolve logistical issues, and until then, the physical market will remain tight."

Saudi Production Capacity Damaged, Another Bypass Route Cut Off

Supply pressure is coming from more than just the strait closure.

Saudi Arabia disclosed on Thursday that recent attacks on its energy infrastructure have led to a reduction of about 600,000 barrels per day in capacity. The affected oil fields are Khurais and Manifa, accounting for about 5% of Saudi Arabia’s normal 12 million barrels per day capacity.

More critically, Saudi Arabia’s East-West pipeline—a key alternative to bypass the Strait of Hormuz—was attacked this week, causing about 700,000 barrels per day in throughput losses. This means the much-anticipated "backup export route" is now also blocked.

Ceasefire Agreement Up in the Air, Negotiations Yet to Begin

Although a two-week U.S.-Iran ceasefire agreement was announced this Tuesday, the situation is far from stable. Within hours of the agreement, Iran once again halted tanker transit.

Iranian Foreign Minister Abbas Araghchi said in a Thursday call with Saudi Foreign Minister Prince Faisal bin Farhan that Iran has not started direct negotiations with the United States.

On the same day, Trump stated, "Soon, you will see oil start to flow," but also criticized Iran for "doing a terrible job in allowing oil shipments through," and warned Tehran that "it’d better not" charge a toll for safe passage.

Trump is sending a delegation to Islamabad including Vice President JD Vance, envoy Steve Witkoff, and his son-in-law Jared Kushner, with talks planned for this weekend.

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