The Price Of Oil Is Really $141, Much Higher Than Expected

The price of a barrel of WIT (one of the crude oil blends) is $112 today. The price of Brent (from the North Sea) is $108. Early in the year, WTI was $62. Thus, the panic about rising prices.

Many experts do not use either of these metrics. Many traders use Dated Brent. It is the price of oil that will be delivered in 10 days to 30 days. That is the oil that is sitting on ships outside the Strait of Hormuz. It’s the oil that gets refined next month, if it makes it that far.

As CNBC points out “The high price for more immediate oil deliveries points to the tightness of physical supply right now due to the huge disruption triggered by the U.S. war against Iran.” Bloomberg puts it this way. “The world’s most important price for real-world oil barrels surged above $140 on Thursday, the highest since 2008.”

Much of what this boils down to is a false sense of security among the public. The futures are guesses, although highly educated ones. There is speculation that oil could reach $200. With Brand and WTI, that is unlikely. With Dated Brent, if it is not delved, the figure is more realistic. Chevron CEO Mike Wirth described the disconnect. “There are very real, physical manifestations of the closure of the Strait of Hormuz that are working their way around the world and through the system that I don’t think are fully priced into the futures curves on oil,”

In other words, the crude situation is worse than than the public believes.