Analyst warns screen oil price of $100 could mean $145 in physical market
An analyst says that high VLCC freight costs are pushing the effective price of crude from the quoted $100 per barrel to about $145 in actual transactions.
In an interview, the analyst highlighted that the oil market now features divergent pricing, with quoted benchmarks far lower than the prices paid for physical crude. He pointed to VLCC freight rates surpassing $1 million, which translates into an additional $25-plus per barrel, effectively turning a $100 screen price into nearly $145 on the ground. The widening spread is attributed to genuine refinery shutdowns and the continued impact of the Ukraine conflict, which outweighs the West Asia situation.
The analyst noted that India is relatively insulated, possessing sufficient oil imports and large refining capacity that even allows it to export refined products. He added that while price spikes are inevitable if global crude rises, India's diversified sourcing and surplus capacity should guard against shortages.
Why it matters
Understanding the price gap helps investors and policymakers gauge real oil costs amid supply chain pressures.
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