As global crude supplies tighten, oil buyers are paying significantly more for immediate delivery Global crude buyers are now paying a lot more to get a barrel of crude oil immediately, rather than locking in lower prices for delivery in the coming weeks and months. That’s a warning sign that energy markets might struggle to keep up with demand, especially as the recent escalation in the Middle East conflict threatens to further tighten global oil supplies. U.S. drivers also might want to brace for gas prices to rise in the weeks ahead from their current average of $4.32 a gallon at the pump.
The record was nearly $5.02 a gallon in June 2022, following the oil shock unleashed by Russia’s invasion of Ukraine. Higher prices for a barrel of oil take time to filter down to retail gas prices, but a look at the oil market’s “prompt spread” shows bigger gas bills look likely. The spread measures the difference in price for a barrel of oil for immediate delivery versus what it costs to buy a barrel a few weeks down the road.
Don’t Short Yourself offers weekly money tips to help you earn it, stack it and grow it. I would like to receive updates and special offers from Dow Jones and affiliates. I can unsubscribe at any time. **See:**The Houthis have opened a new front in the Middle East oil war that’s pushing up prices The spread narrowed over the summer as a ceasefire and a short-lived diplomatic deal between the U.S. and Iran raised hopes that the worst of the conflict might be over.
But now, the gap has widened again. Brent crude for November delivery , the nearest-term contract for the global benchmark, on Monday traded as high as $109.80 a barrel, according to FactSet data, before easing back to about $105.30, at last check. That compared with oil that can be delivered a month later in December , which was at $100.54 a barrel.
The difference between the two prices was about $5.58 a barrel, its largest gap since July 23, according to FactSet (see chart below). Similarly, West Texas Intermediate crude for October delivery , the nearest-term contract, was hovering above $103 a barrel Monday. But that was about $4.79 a barrel more than the following month’s contract , also putting the so-called prompt spread on track for its widest level in nearly two months.
That gap points to growing concerns over global crude supplies, as well as jitters about the physical oil supply immediately available to the market. China’s hidden domestic reserves and its dramatic throttling back of oil imports earlier during the Iran war surprised global markets by keeping crude prices broadly in check. However, the conflict has now far exceeded earlier estimates of its scope and duration. **Also see:**Saudi Arabia may be just days away from not being able to export much oil The recent escalation between Saudi Arabia and Yemen’s Iran-backed Houthis rebels has put further pressure on global oil supplies.
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