Iran War Widens Gaps Between Oil Futures and Physical Crude Prices

The Iran war has made raw crude prices harder to assess since late February, with infrastructure attacks, shipping disruptions and uncertainty around Strait of Hormuz flows widening the gap between futures and physical markets.

Refinery constraints, wider fuel spreads, freight volatility, rerouted cargoes and market interventions are producing conflicting signals about the value of crude. Futures prices can therefore move differently from prices in the physical market, where actual barrels change hands.

The conflict has also increased volatility in gasoline and diesel markets. A release from the Strategic Petroleum Reserve could signal that supply is adequate, but it may also encourage higher consumption and place additional pressure on inventories while reserves take time to replenish.

The Strait of Hormuz remains a central factor for global oil flows. Persian Gulf oil producers are competing for Asian market share as shipments through the waterway increase, adding another layer to price formation during the conflict.