The oil supply shortage triggered by the war between the US, Israel, and Iran is showing a double-edged face. In reality, the situation may be significantly worse than what is reflected in Brent crude futures prices, carrying heavy implications for global prices and inflation.
The premium
Specifically, while the price of Brent oil was trading at $108.17 per barrel on Friday, May 1, 2026, experienced executives from Greek refineries explain that there is a massive discrepancy in the physical delivery of the product. Some cargoes are being priced at a premium of $40-$50 above the stock market price. In other words, the oil supply for refineries is not being conducted solely at market exchange rates. This gap is further confirmed by Greek tanker companies, which are reporting successive records in charter rates. What remains unknown to the broader market is the true extent to which these physical oil deliveries are taking place. According to the same sources, the physical delivery price includes shipping costs, cargo insurance, traffic through the Strait of Hormuz, and other factors. Prices are also driven by intense demand from countries like China, whose economy requires vast quantities and appears indifferent to the high costs. Aside from the significant supply shortage, a major market regulator is the US oil reserves. Although these are being released into the market, they are insufficient to exert downward pressure on prices. While the Trump administration reassures the public that prices will collapse once a deal is signed, this does not appear to be happening in reality, not even for exchange-traded prices.
Forecasts for an explosive rise
Oil market experts admit that it will take months, perhaps even a year, to restore the normal supply chain, including production, distribution, and refining. However, the question remains: what will it mean for the economy and inflation when physical delivery prices are already at $140-$150 and forecasts suggest futures prices will soon converge with them? Foreign firms are aggressively revising their price targets, especially in the extreme scenario of a new wartime escalation. ING predicts prices of $150 in the third quarter and $120 for the fourth quarter. Investment banks Goldman Sachs and Bank of America forecast price increases between $120 and $150. Citigroup, for its part, envisions even higher prices, reaching $150 in a bull scenario and up to $220 in an extreme scenario. This domino effect of oil price hikes does not stop here, as the increase is transferred to the transport sector, specifically impacting aviation and marine fuels.
The advantage for Greek refineries
The shortage of complex refineries in Europe—those with advanced product refining capabilities—has led to a rally in aviation fuel prices. Greece possesses complex refineries, such as Motor Oil and Helleniq Energy, which do not only profit from high refining margins. They also have the capacity to produce aviation fuel and are already benefiting in their export sectors from these price hikes. This specific category of aviation fuel was the first to react upward following the oil market turmoil, creating a significant opportunity for refineries. Data from this market for the first quarter of 2026 for these two refineries is expected to provide a clear picture for the rest of the year and, most importantly, the broader impact on the economy.
Dimitris Pafilas
dpafilas@yahoo.com
www.bankingnews.gr
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