Oil prices can swing by tens of dollars within hours, as happened this week amid the war surrounding Iran. Yet the headline oil price is only one signal from the commodity markets. A further ten indicators reveal where pressure in the energy system is truly building.
The price of Brent crude briefly surged toward 120 dollars a barrel on Monday as investors worried about the economic consequences of the conflict with Iran. But markets reversed sharply overnight after Donald Trump suggested the attacks could soon come to an end.
Tensions in energy markets eased, and the steep price pressure on the futures curve moderated. According to Middle East energy specialist Cyril Widdershoven of Blue Water Strategy, however, any sense of relief may prove premature. “It is not over. This is only for show. Out of fear of high gasoline prices at the pump in the US,” Widdershoven told Investment Officer.
The oil futures price shows only the visible surface of the market. The deeper signals of stress often appear elsewhere: in tanker rates, refining margins, fuel prices, shipping insurance costs and the spread between physical crude and financial contracts. How are those indicators evolving?
1. Physical oil versus paper oil
The physical oil market revolves around real cargoes that must be transported, insured and refined. Producers, refineries and trading houses such as Vitol and Trafigura exchange barrels in this market, while the futures market is populated by what traders sometimes call “Wall Street refineries” reflecting expectations, positioning and the sentiment of financial investors.
Traders can build large positions on paper without ever seeing a barrel of oil. Only a limited number of contracts are tied to physical delivery, such as Brent cargoes delivered in Sullom Voe in the Shetland Islands or WTI in Midland, Texas. Anyone still holding such a contract at 5 p.m. on expiry day must suddenly arrange transport, insurance and a refinery. In industry jargon, the trader has been “five-o’clocked”.
That can become expensive if your only asset is an office on Wall Street. Physical oil traders are known to use this mechanism to squeeze hedge funds that stay too long in expiring contracts.
When futures prices rise faster than prices in the physical market, the move may therefore reflect financial positioning rather than an actual shortage of oil.
2. The futures curve
The structure of the futures curve is one of the most important diagnostic tools in the oil market. Two concepts matter most: backwardation and contango. In backwardation, prices for immediate delivery are higher than prices for later delivery, signaling tight supply in the physical market. Contango is the opposite: spot prices are lower than future delivery prices.
On Monday, Brent traded in steep backwardation. The May 2026 contract was near 100 dollars a barrel, while January 2027 traded closer to 75 dollars. By Tuesday, that gap had narrowed to less than 20 dollars.
This suggests traders view the current tightness as temporary. The market is effectively saying two things at once: oil is scarce today, but the system expects supply to recover.
In other words, the oil market is pricing tightness, not panic.
3. Diesel and refining spreads
The so-called diesel crack spread — the price of diesel minus the price of crude oil — reflects strong demand from transport, shipping and industry, and relatively low supply. When supply becomes uncertain, this margin tend to widen quickly.
That happened last week. At more than 50 dollars per barrel, the diesel crack spread has reached its highest level since late 2022. The European diesel price in the ARA spot market (Amsterdam–Rotterdam–Antwerp) has risen above 1,000 dollars per ton, also the highest level since the end of 2022.
Refiners generally prefer Persian Gulf crudes like Basrah Heavy (Iraq), Kuwait Export Crude (KEC) and Arab Light (Saudi Arabia) for diesel production.
Another explanation is that European refining capacity has been shrinking for years, falling from more than 800 million tons in 2009 to just over 638 million tons in 2024. That leaves the continent with less room to absorb supply shocks.
Higher diesel prices feed into the economy almost immediately. They translate into more expensive freight transport, higher logistics costs and ultimately higher prices at the pump.
Diesel prices these days send a clearer stress signal than crude oil itself.
4. The jet fuel market
Jet fuel provides another window into refinery dynamics. Since the outbreak of the conflict with Iran, aviation fuel prices have more than doubled. At the same time, Europe remains heavily dependent on imports.
According to data from Kpler and Vortexa, more than half of Europe’s jet fuel imports come from the Gulf region, while supply in the European market has become structurally tighter.
Jet fuel prices jumped 28 percent last week, to 1,285 dollars per ton. That’s up 79 percent from the average price in 2025, according to the IATA aviation body.
Fuel is one of the largest cost items for airlines. When jet fuel prices rise, higher ticket prices become difficult to avoid.
5. Naphtha and chemicals
Another signal appears at the lighter end of the refining process: naphtha. This light fraction of crude oil is an essential feedstock for the petrochemical industry, used to produce plastics and solvents. Large parts of Europe’s chemical sector depend on it.
Rising oil prices therefore translate directly into higher production costs. The price of naphtha reached its highest level since July 2022 on Monday, at 780 dollars per ton.
Germany’s chemical industry association VCI warned immediately that its members, already pressed by high energy prices, will have to pass on higher energy costs stemming from the Iran crisis. The effects can persist for weeks or even months.
6. Tanker rates and Worldscale
The tanker industry often provides one of the clearest signals of stress in the system. Freight rates are quoted globally using the Worldscale system, a standard index that expresses shipping costs as a percentage of a benchmark rate for a specific route and tanker type. WS100 represents the benchmark rate, while WS150 means prices are 50 percent higher.
In the past week, rates for VLCC tankers on major Gulf routes reportedly surged to around WS700. That implies daily revenues for shipowners of up to 500,000 dollars.
For traders, this price level can translate into roughly 20 dollars in additional transport costs per barrel.
7. Shipping insurance
Insurance premiums usually move in tandem with tanker rates and are typically embedded in Worldscale freight costs. The London-based Joint War Committee, part of the Lloyd’s insurance market, maintains a list of maritime areas with elevated war risks. Ships entering such zones must obtain additional insurance coverage.
Last week the committee added Bahrain, Djibouti, Kuwait, Oman and Qatar to its list of areas facing risks from war, piracy and terrorism.
The White House also floated the idea of a U.S.-backed insurance scheme for tankers operating in the Gulf, but the proposal has so far gained little traction among shipowners and insurers.
Increased insurance costs per voyage ultimately feeds back into freight rates.
8. Oil volatility
Options traders often react faster than the physical market. The Cboe crude oil volatility index, or OVX, measures the market’s expected price swings in crude oil over the next 30 days. Often described as the oil market’s equivalent of the VIX, it serves as a gauge of fear and uncertainty among traders.
Unlike the oil price itself, the OVX tracks implied volatility rather than the level of crude. It is calculated from options on the United States Oil Fund (USO), an exchange-traded fund designed to track West Texas Intermediate crude oil futures.
Higher readings signal rising expectations of price swings. Levels below 25 generally indicate a stable market, while readings between 25 and 40 suggest moderate uncertainty. Values above 40 typically appear during geopolitical shocks or supply disruptions.
On Monday the index jumped 7.1 percent to 111 before easing back toward 100 on Tuesday. Before the conflict began, the OVX had been trading around 65.
9. Oil companies
Shares of oil majors typically rise when crude prices climb, as investors anticipate stronger cash flows. Shell, TotalEnergies and BP outperformed the broader European equity market during the recent oil price spike.
Shell’s share price, for example, helped limit losses in the Dutch AEX index on Monday.
Further down the value chain, oilfield services companies such as Halliburton also benefit when higher prices lead to more drilling and exploration activity.
10. Gas, LNG and the TTF
Higher oil prices and stress in energy markets tend to spill over into gas and LNG markets. In Europe, the Dutch Title Transfer Facility, or TTF, serves as the key benchmark for natural gas prices.
Following Russia’s invasion of Ukraine in 2022, TTF prices reached record levels of around 200 euro per megawatt hour.
The front-month April contract traded around 48 euro per megawatt hour on Tuesday, down from Monday’s four-year peak of 56 euro but well above roughly 30 euro at the end of February.
Like oil, gas is currently trading in backwardation, although the structure is less pronounced.
Europe’s gas position has also changed structurally. Since the continent moved away from Russian pipeline gas, dependence on LNG has increased sharply. The United States has become Europe’s largest supplier, alongside Qatar.
That means U.S. export capacity, weather conditions along the Gulf Coast and American energy policy are now increasingly important drivers of European gas prices.
When several of these indicators start moving in the same direction, energy markets are usually signaling one thing: the shock is not over yet.