Oil on paper rose, oil in hand fell $15

This morning the count was ships at anchor. This evening it is barrels that got through. Middle East crude exports have averaged 17.3 million barrels a day so far in October, up from 16.4 million in September and above the 16.9 million of the two months before the war, according to Kpler data cited by Reuters¹.

The strait is working, slowly and expensively. Crude flows through Hormuz reached 11.7 million barrels a day in October, about 82% of pre-war levels, against less than 1 million in April, excluding Iranian oil, Kpler says¹. More tankers sail in convoys along Oman’s coast under US naval protection; about a third of crossings still use the Iran-controlled northern route, Reuters reports¹. This happens under fire: 28 attacks on commercial shipping were confirmed or reported this month, the highest monthly tally in the Washington Institute’s tracking¹.

Two prices for one barrel. Dated Brent, the benchmark for physical cargoes, has fallen about $15 in under two weeks to some $120, while Brent futures gained about $10, Bloomberg reports¹. On Tuesday afternoon futures were down 1.7% at $113.88². The physical market is pricing what is available. The futures market is pricing what might happen next: Iran’s supreme leader said on Tuesday that the state of “neither war nor peace” needs to end, and discussed keeping “control” over the strait².

The quiet signal. The premium of the nearest Dubai contract over the following month has shrunk to under $1 a barrel from about $15 a month ago¹. Desk arithmetic: the cost of wanting oil now rather than in a month has fallen by more than nine tenths. Buyers have stopped bidding as if supply might vanish tomorrow.

For you, the barrel that matters is the physical one: it is what refiners actually buy. Freight, convoys and storage are how an economy reroutes itself around a war, one invoice at a time.