By Yongchang Chin

(Bloomberg) — The growing stress in the oil market triggered by the Middle East war is showing up in huge premiums for prompt real-world barrels, with the wider Brent complex working as it should, according to Morgan Stanley.

Buyers are “paying an exceptional premium for secure, refinery-usable Atlantic Basin barrels available now,” analysts including Martijn Rats said in a note dated April 7. “That does not mean the futures market is broken. It just means that different parts of the complex are pricing different combinations of immediacy, tightness and expected persistence,” they added.

The global crude market has been upended by the war between the US, Israel and Iran, which triggered the near-complete closure of the Strait of Hormuz, a vital corridor for energy flows. The extended disruption has set off a scramble — especially from Asian buyers — for alternatives, spurring interest in cargoes from Europe and the US. Reflecting that struggle, measures of physical demand have outpaced gains in futures by a wide margin.

Ahead of the Easter weekend, Dated Brent — the world’s most important price for real-world barrels, which tracks North Sea shipments — surged above $140 to the highest since 2008. At the same time, futures have risen, but not to the same extent. June contracts were last near $108 a barrel.

Dated Brent acts as the physical anchor of the wider complex, while futures are the “liquid financial layer” that’s the most visible, the analysts said. “The two prices are related, but they are not the same thing.”

They added: “Stress is appearing first in the part of the benchmark that is closest to the immediate physical problem.”

Brent futures fluctuated on Tuesday after US President Donald Trump escalated threats to obliterate key Iranian infrastructure if his terms weren’t met before a deadline. He listed reopening Hormuz as a priority.

(Adds chart, and updates futures in fourth, final paragraphs.)

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