Tanker Markets Surge as Physical Oil Barrels Disappear from Global Trade

According to a report from gCaptain, tanker markets have broken loose as physical barrels of oil vanish from global trade. Surging oil prices in physical markets - the trading place for oil on ships, rail cars or in storage tanks - have outpaced the already dizzying increases in benchmark futures markets. Refiners and traders across Asia and Europe are snapping up whatever barrels they can secure to plug the enormous supply gap left by the loss of Russian crude and refined products due to sanctions. This has led to a 'supercharged' physical oil market, with premiums for prompt delivery of crude oil reaching levels not seen in over a decade. 'The physical market is completely broken,' said one veteran oil trader. 'Refiners are desperate for barrels and are willing to pay any price to get them.' The loss of Russian oil has created a supply shortage that physical traders are scrambling to fill. Benchmark Brent crude futures have risen over 30% since the start of the year, but physical crude grades have seen even sharper spikes. The premium for immediate delivery of Urals crude from Russia has surged to a record $35 per barrel over the global Brent benchmark. This extreme tightness in physical markets is having a knock-on effect across the global tanker industry. Rates for supertankers hauling crude oil from the Middle East to Asia have more than doubled in recent weeks, reaching the highest levels since 2020. Similarly, product tanker rates for moving refined fuels have also spiked as traders compete for scarce cargoes. 'It's a complete frenzy out there,' said a shipbroker. 'Charterers are willing to pay whatever it takes to secure ships and get those barrels moving.'