According to WPB, the global physical oil market remains substantially tighter than headline futures prices suggest, with Middle East crude exports still running around 7 million barrels per day below their pre-crisis level even as Brent remains below $100 per barrel.
Current Middle East crude shipments are estimated at approximately 11 million barrels per day, compared with close to 18 million barrels per day before the Iran conflict disrupted normal export flows. That represents a reduction of roughly 39% and shows that a large part of the region’s normal crude supply has still not returned to international markets.
The scale of the decline is particularly significant because the Middle East remains one of the central supply regions for Asian and global refiners. A loss of around 7 million barrels per day from normal export flows cannot be assessed only through the movement of Brent futures because refiners ultimately require physical barrels delivered at the right location, specification and time.
That distinction is now increasingly visible in spot markets. Some physical crude barrels are trading above $100 per barrel even though benchmark Brent futures remain below that threshold. Oman futures recently traded above $104 per barrel, while cash Dubai moved above $105, demonstrating how significantly immediate physical availability has tightened relative to headline futures pricing.
Spot premiums for Dubai- and Oman-linked crude have also widened sharply, with some November-loading barrels carrying premiums of around $19–20 per barrel over Dubai quotations. Such premiums indicate that buyers are paying considerably more to secure actual near-term crude supply than the benchmark futures market alone would suggest.
The divergence between futures and physical prices matters because it changes the effective replacement cost for refiners. A refinery unable to obtain its normal feedstock does not simply purchase a theoretical Brent barrel; it must compete for an available physical crude with the appropriate quality, loading window and logistics.
This helps explain why Brent has not needed to exceed $100 for the physical market to feel considerably tighter. The global benchmark reflects expectations about future supply and demand, while spot differentials show the immediate competition among refiners for barrels that can actually be delivered.
Several factors have prevented the disruption from producing an even larger increase in benchmark prices. Gulf exporters have increased the use of alternative routes and transfer arrangements, while producers outside OPEC have continued adding supply.
Saudi Arabia and other regional exporters have been using ports, pipelines and ship-to-ship transfers outside the Strait of Hormuz to preserve part of their export capability. Exports through Egypt’s Sidi Kerir, for example, rose to more than 2 million barrels per day, demonstrating how alternative infrastructure can partially reduce the impact of disruption inside the Gulf.
The UAE has also maintained substantial export volumes, while Iraqi and Kuwaiti flows have recovered from earlier disruption. These movements do not replace all of the lost Middle East supply, but they have prevented the reduction in physical exports from becoming even more severe.
Non-OPEC production provides another cushion. The United States, Canada and Guyana are expected to increase combined production by around 1.4 million barrels per day, helping replace part of the barrels unavailable from the Middle East.
Russian crude exports have also remained comparatively resilient. Shipments were around 5.5 million barrels per day during July and August, lower than the June peak but still significantly above levels seen earlier in the year, partly because refinery disruptions inside Russia have left more crude available for export.
These additional barrels help explain why the global market has avoided an outright supply collapse. They do not, however, eliminate the geographical dislocation created by the Middle East shortfall.
A refinery in Asia that previously relied on nearby Gulf crude cannot necessarily replace those barrels with North American or Atlantic Basin supply at the same cost. Longer shipping distances, different crude qualities and higher transportation expenses can all increase the effective cost of replacing lost feedstock.
Demand weakness has also prevented benchmark oil prices from responding more aggressively. High energy prices and economic pressure have already reduced consumption in some sectors, while China has been able to rely partly on substantial inventories and lower seaborne crude purchases.
Estimates suggest demand destruction in transportation fuels and petrochemicals remains significant. This demand response limits how far benchmark prices can rise because higher prices themselves begin reducing consumption.
The result is an unusual market structure: physical crude availability is tight, but several supply offsets and weaker demand are preventing the futures market from fully reflecting the severity of the regional export disruption.
For refiners, however, the physical market is what determines operations. A refinery needs actual crude deliveries to maintain throughput, and a persistent shortage of suitable feedstock can force operators to reduce runs, change crude grades or pay a higher premium for replacement barrels.
This is where the development becomes relevant to the bitumen industry.
The fall in Middle East crude exports does not prove that global or regional bitumen supply has declined by the same amount. Crude exports and bitumen production are different markets, and no direct relationship should be drawn between a 7-million-barrel-per-day crude shortfall and any specific reduction in bitumen output.
However, the disruption can influence bitumen through refinery throughput and feedstock economics. When refiners face difficulty securing normal crude supply, their ability to operate continuously and optimize production across different products can become more limited.
Crude quality also matters. Bitumen is produced from heavy refinery residues, and different crude grades generate different quantities and qualities of residue suitable for road binder production. A refinery forced to substitute its normal heavy or medium crude with a different feedstock may see changes in the economics or technical characteristics of bitumen production.
Replacement cost is therefore an important variable. If a refinery must pay a substantial spot premium to secure crude, the higher feedstock cost affects the economics of the entire refinery barrel, including heavy products.
That does not automatically mean the refinery will raise bitumen prices by the same amount. Product pricing is also determined by regional demand, inventories, competing refinery margins, contractual structures and local market conditions.
This explains why regional bitumen prices can move in different directions even during a major crude disruption. A tight physical oil market is an important upstream pressure, but it does not create a uniform price response across every bitumen-producing country.
Some markets may have strong refinery availability or weaker road demand and therefore remain relatively soft. Others may face simultaneous feedstock pressure, limited imports and stronger seasonal demand, producing a much tighter local balance.
Refinery economics can further complicate the relationship. When margins for diesel or gasoline are particularly attractive, refiners may seek to maximize production of those products by sending more heavy material into conversion units rather than preserving it for lower-value residual products.
Bitumen producers therefore need to monitor not only crude prices but also crude availability, refinery margins and the opportunity cost of retaining heavy streams for road-binder production.
The shipping side creates a second major connection between physical crude disruption and bitumen.
Much of the current Middle East crude shortfall reflects not only production conditions but also difficulties moving barrels through traditional export routes. Shipping restrictions around Hormuz can reduce the amount of oil reaching buyers even when the crude itself has been produced.
Bitumen faces an even more specialized logistics requirement. Bulk material cannot simply be transferred through every crude-oil bypass system because it requires heated storage, temperature-controlled transfer and specialized vessels.
This creates an important limitation when governments or producers announce alternative crude export routes. A pipeline capable of moving several hundred thousand barrels of crude per day outside Hormuz does not automatically provide equivalent resilience for bitumen exports.
For packaged bitumen, roads, containers and alternative ports may provide greater flexibility. Bulk cargoes, however, require dedicated terminal and marine infrastructure before they can benefit fully from a bypass corridor.
The current physical oil disruption therefore reinforces the distinction between production capacity and deliverable supply. A refinery may technically have bitumen available, but that product contributes to the international market only if it can be stored, loaded, insured and transported to the buyer.
The same principle now applies increasingly to crude oil. The Middle East can possess substantial production capacity while actual exports remain millions of barrels per day below normal levels because the physical delivery system is constrained.
That is also why oil-price forecasts are being revised upward even though Brent has remained below $100. Morgan Stanley now expects Brent to average around $100 per barrel during the fourth quarter, while Goldman Sachs has raised its Brent and WTI forecasts for late 2026 and 2027 on expectations that Middle East shipping disruptions could continue.
These projections remain forecasts rather than confirmed future prices. They reflect analysts’ assumptions about the duration of shipping constraints, demand conditions and the speed at which alternative supply can enter the market.
The uncertainty remains substantial. If Hormuz traffic normalizes, alternative Gulf routes expand and unavailable barrels return quickly, physical premiums could fall even without a major increase in global production.
If disruption persists, however, the current gap between futures prices and physical crude costs may become increasingly important. Refiners may continue paying elevated premiums for immediate barrels even if benchmark futures remain below psychologically important levels.
For the bitumen market, this would mean that crude benchmarks alone become a less complete indicator of cost pressure. Buyers and suppliers may need to watch spot crude premiums, regional refinery throughput and replacement-feedstock economics alongside Brent.
The key development is therefore not simply that Middle East exports are lower. The more important change is that approximately 7 million barrels per day of normal regional crude exports remain absent while the physical market is already pricing available barrels much more aggressively than headline futures indicate.
For asphalt and bitumen markets, that creates an upstream risk without guaranteeing a uniform price increase. The effect will depend on the refinery, crude slate, local demand, inventory position and logistics available in each market.
What can be said with greater confidence is that the global petroleum system has become less flexible. Refineries are competing for fewer readily deliverable Middle Eastern barrels, alternative supply often requires longer routes, and bypass systems that work for crude cannot automatically be replicated for bitumen.
That distinction between nominal availability and physically deliverable supply is becoming increasingly important across the entire petroleum chain.
For the global bitumen industry, the next signal to watch is not only whether Brent crosses $100. It is whether Middle East crude exports begin moving back toward their pre-crisis level and whether physical premiums for immediately available barrels start to normalize.
Until that happens, pressure on refinery feedstock economics and the cost of replacing disrupted crude supply is likely to remain one of the key upstream risks facing bitumen producers and buyers.
By WPB
News, Bitumen, Crude Oil, Middle East, Physical Oil Market, Brent, Dubai Crude, Oman Crude, Refining, Strait of Hormuz, Shipping, Asphalt
