Javier Blas: Rising oil prices don’t reflect physical availability, the energy crisis could escalate soon, and geographical proximity affects crisis response | Odd Lots

Rising oil prices mask a looming crisis where some countries may struggle to secure any supply.

Listen on Odd Lots

Share

Add us on Google by Editorial Team Apr. 10, 2026

Key takeaways

• There is a significant disconnect between rising oil prices and the actual physical availability of oil.
• Current oil price quotes may not accurately reflect real transactions due to supply chain issues.
• The ongoing energy crisis has the potential to escalate significantly in the coming weeks.
• The duration of an energy crisis is crucial in determining its overall impact on markets.
• Geographical proximity to oil supply sources affects how quickly a crisis is felt in different regions.
• In a severe crisis, some countries might face situations where oil cannot be obtained at any price.
• Brent crude is not a true representation of the average global barrel of oil, especially for Middle Eastern oil.
• Significant tension is observed in the market for refined products, particularly in Southeast Asia.
• The disconnect between crude oil and refined product prices is due to lost production in both areas.
• The refining market acts as a buffer between crude oil shortages and consumer demand, leading to extreme pricing.
• Oil market dynamics during crises highlight the complexities of supply chain disruptions.
• The geopolitical landscape can significantly impact oil supply routes and market stability.
• Historical energy crises provide context for understanding current market conditions.

Guest intro

Javier Blas is a Bloomberg Opinion columnist covering energy and commodities, based in London. He previously served as chief energy correspondent at Bloomberg News and commodities editor at the Financial Times. He co-authored The World for Sale, a book on the secretive world of energy and commodity trading.

The disconnect between oil prices and physical availability

• There is a disconnect between the rising oil prices and the actual physical availability of oil.

  — Javier Blas

• The financial world and physical oil supply are not aligned, causing market confusion.

• It feels also like there’s this disconnect between what’s going on in the financial world and what’s going on in the physical world which I don’t get.

  — Javier Blas

• Understanding the dynamics of oil pricing is crucial during crises.
• Market prices often do not reflect the actual physical supply of oil.

• The real issue on pricing is that while sellers and buyers can quote almost any price nothing is actually getting out of the gulf.

  — Javier Blas

• Supply chain issues make market discussions more academic than practical.
• Misleading market quotes can obscure the true state of oil availability.

The potential escalation of the energy crisis

• The current energy crisis could escalate significantly in the coming weeks.

  — Javier Blas

• Historical precedents show that energy crises can worsen over time.
• The current crisis is still in its early stages compared to past events.

• It’s bad and it could get really bad… give it a few more weeks and certainly we will get there.

  — Javier Blas

• The length of a crisis is critical in determining its impact.

• We are still at it four years later… that was about eight months… at times we forget how long other crisis were.

  — Javier Blas

• Market reactions are influenced by the duration of an energy crisis.
• Understanding past crises helps in assessing potential outcomes for the current situation.

Geographical impact on oil crisis response

• Proximity to oil supply sources affects crisis response times.

• The closer that you are to that location the more action you need to take because you typically depend more of that flow of oil coming from the Middle East.

  — Javier Blas

• Regions closer to supply sources feel the impact of disruptions earlier.
• Geographical distance plays a role in oil transportation dynamics.
• Countries near conflict zones may face more immediate supply challenges.
• Understanding global oil supply dynamics is crucial for strategic planning.
• The speed of crisis impact varies based on geographical factors.
• Oil transportation routes are influenced by geopolitical tensions.

Extreme scenarios in oil supply disruptions

• In severe crises, some countries may not obtain oil at any price.

• In an absolutely full blown crisis where we have the strait of Hormuz closed for many months… we can get into a situation that no matter what you are offering for a barrel of oil no one is willing to sell.

  — Javier Blas

• Geopolitical instability can lead to extreme supply scenarios.
• The closure of key supply routes can exacerbate crisis conditions.
• Understanding geopolitical tensions is key to assessing supply risks.
• Extreme scenarios highlight the vulnerabilities in global oil supply chains.
• Strategic reserves may not suffice in prolonged crises.
• Market stability is heavily influenced by geopolitical developments.

Limitations of Brent crude as a benchmark

• Brent crude is not representative of the average global barrel of oil.

• Brent is just effectively a short term for the average barrel in the world and it’s not really the average barrel that comes from the Middle East.

  — Javier Blas

• Different benchmarks exist for oil pricing based on geographical relevance.
• The limitations of Brent highlight the need for diverse pricing metrics.
• Middle Eastern oil is not accurately reflected in Brent pricing.
• Understanding benchmark limitations is crucial for market analysis.
• Regional differences in oil quality affect pricing benchmarks.
• Accurate pricing requires consideration of multiple market factors.

Tensions in the refined products market

• The price of refined products is where we are seeing significant tension in the market.

  — Javier Blas

• Southeast Asian markets are experiencing extreme refined product prices.
• The disconnect between crude and refined prices indicates supply issues.

• What matters really is the price of refined products and there actually we are beginning to see particularly in the east in the southeast Asian markets some very extreme prices.

  — Javier Blas

• Lost production in crude and refined products contributes to pricing tensions.

• We have lost not only a lot of crude oil production but we have lost a significant chunk of refined production.

  — Javier Blas

• Understanding the dynamics of crude versus refined markets is crucial.
• Market demand and supply chain disruptions drive refined product pricing.

The refining market’s role as a buffer

• The refining wall is acting as a buffer in between crude oil that is not there and consumers that they have not yet realized that the crude oil is not there.

  — Javier Blas

• The refining market attempts to balance crude shortages and consumer demand.
• Extreme pricing is a mechanism to reconcile supply and demand gaps.
• The refining market dynamics highlight the impact of supply constraints.

• The refined market is trying to basically get that two together and the way that it can only do it is by extreme pricing.

  — Javier Blas

• Understanding refining market mechanisms is key to analyzing oil industry trends.
• The buffer role of refining markets is critical during supply disruptions.
• Consumer awareness of crude shortages influences market dynamics.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.