@KobeissiLetter The benchmark divergence is the most underreported story in the oil market right now. A $61 spread between Oman crude and WTI tells you the physical market in the Gulf is in crisis while the paper market in New York is still pricing in a resolution. That gap is not sustainable. It closes one of two ways: either the Strait reopens and Oman collapses back toward $100, or the Strait stays closed and WTI reprices up toward Oman.
The IEA released 400 million barrels from strategic reserves last week. At a supply gap of 8-10 million barrels per day, that covers roughly 40-50 days of the disruption. We're already 18 days into the conflict. The reserves are a stopwatch, not a solution. Once they're drawn down, the physical shortage that Oman crude is pricing at $154 starts showing up in Brent and WTI.
The $5 spread pre-war across all benchmarks reflected a globally connected oil market. The $61 spread today reflects a market that has been physically severed in half. Gulf barrels can't get out. Atlantic basin barrels are picking up the slack but there aren't enough of them. Saudi Arabia cut 2-2.5 million barrels per day because their storage is full. Iraq is down 70%. The Gulf is producing less because it literally has nowhere to put the oil.
This is the chart that should be on every trading desk right now. When the arbitrage between regional benchmarks breaks this badly, it historically resolves violently in one direction or the other. The question is timing, and the answer is the Strait.
$USO $CL_F $BNO
