Core Viewpoint - The oil futures market is underestimating the significant supply disruption caused by the closure of the Strait of Hormuz, leading to a disparity between physical and paper crude prices [1][2]. Group 1: Price Movements - Crude futures prices initially spiked to $119 per barrel before settling in the $90s, trading at $100 per barrel in early Asian trade [1]. - The premium of physical Dubai crude has surged to $38 per barrel over its paper equivalent, indicating immediate supply constraints [1]. Group 2: Supply Disruption - The gap between paper and physical prices suggests that supply is being significantly restricted, with traders in the paper market optimistic about a quick resolution to the conflict [2]. - Analysts are now considering the possibility of $200 oil due to 20% of global oil supply being affected, leading to increased demand for physical cargoes and potential cuts in processing rates by refiners in Asia [3]. Group 3: Emergency Stock Releases - The International Energy Agency (IEA) announced a coordinated emergency release of 400 million barrels of oil stocks, marking the largest such action in history [4]. - The release will take weeks to months to reach the market, with U.S. stock releases expected to take about 120 days to complete, which is insufficient to cover the supply losses from the Persian Gulf [5]. Group 4: Production Cuts - Gulf producers have reduced their combined oil output by at least 10 million barrels per day due to limited capacity and filling storage [6]. - Over 3 million barrels per day of refining capacity in the Gulf has been shut down due to attacks and lack of export options, leading to further limitations on processing elsewhere [6].

A countries have unanimously decided to launch the largest ever release of emergency oil stocks in our agen history. 400 million bar oil market offset losure. ...