Key facts
- Brent crude oil futures traded around $100 a barrel, with WTI futures near $92.
- Shipping costs could increase to $15-$20 per barrel due to Red Sea and Strait of Hormuz disruptions.
- The refining premium for diesel has nearly tripled to over $80 a barrel.
- Analysts warn that the energy shock is greater than the crude price alone suggests.
- Low global natural gas stock levels are a concern, especially for Europe ahead of winter.
Oil prices have surged past $100 a barrel, driven by renewed conflict between the US and Iran and disruptions in the Red Sea and Strait of Hormuz. Analysts warn that the true energy shock is more significant than the crude price indicates, as shipping and refined fuel costs are escalating even faster.
Mizuho estimates that shipping costs could rise from $10-$12 a barrel to $15-$20 a barrel. The premium for refining crude into diesel has nearly tripled, pushing the effective price of diesel to over $180 a barrel, a stark increase from about $93 earlier this year. This tightening in refined fuel markets is exacerbated by potential Russian export bans.
Concerns also extend to natural gas, with global stock levels described as critically low. Europe faces a particularly tight situation as it prepares for winter, with storage levels remaining unusually low for this time of year. While alternative crude supplies have provided some buffer, the rising costs and scarcity of refined products like gasoline, diesel, and aviation fuel signal growing global energy supply concerns.