JP Morgan Global Commodities Research has cautioned that the global oil market is masking the true cost of crude, as physical prices in the Middle East have surged to around $155 per barrel while benchmark rates like Brent remain near $100.
In a report issued on March 17, the bank highlighted a sharp supply shock centered in the Middle East. It noted that widely followed benchmarks such as Brent and WTI appear relatively stable due to elevated inventories in the US and Europe, along with releases from strategic reserves.
However, regional benchmarks like Dubai and Oman crude — which better reflect Gulf supplies to Asia — indicate significant stress in the market. JP Morgan warned that if the Strait of Hormuz remains closed, global benchmarks will eventually adjust upward, emphasizing that the actual price of oil has already climbed to $155 per barrel, with broader impacts yet to fully materialize.
Asia, heavily dependent on Gulf imports exceeding 11 million barrels per day, is already experiencing rising fuel costs and early signs of weakening demand. The bank added that the current stability in Atlantic benchmarks is likely temporary, with risks of a sharp price surge if supply disruptions continue.
The report also pointed out that the scale of current supply disruptions ranks among the most severe since 1950, comparable to major historical shocks such as the Iran-Iraq War, the Iranian Revolution, and the 1973 Arab Oil Embargo.
