Brent: Diesel signals higher prices – Societe Generale

Societe Generale analysts Michael Haigh and Jeremy Sellem have noted that a significant gap exists between physical Brent oil prices and their corresponding futures prices. They explain that Dated Brent is trading at a substantial premium, indicating the need for Brent to surpass $150 per barrel to restore historical refining economics.

The report highlights that product scarcity is increasing due to tight product supplies. As of late September, Brent crude had reached nearly $110 per barrel, driven by heightened geopolitical risks following attacks on Saudi energy infrastructure. When 10-year Treasury yields surpassed 5%, the focus shifted from geopolitical pressures to economic stability, with Trump attempting to lower oil prices by suggesting progress in ending the war.

The most notable aspect of the current oil market is the divergence between physical and financial crude prices, which has increased since 2017. In September 2026, this premium surged to above $20 per barrel, one of its highest levels in a decade. This divergence widened sharply between early August and mid-September, with Dated Brent rising from around $92 per barrel to $127 per barrel, while front-month Brent increased from approximately $89 per barrel to $105 per barrel, expanding the premium from around $3.5 per barrel to more than $21 per barrel.

This implies that refiners pay a more substantial price for crude than the headline Brent price shown on financial screens. The market is assigning a growing premium to immediate physical availability, a classic sign of tightening prompt supplies. Based on historical relationships, Brent should be trading above $150 per barrel for traditional refining economics to hold.

The analysts argue that restoring this relationship has been a key factor in recent crude price catch-up relative to products, and that prolonged conflict will intensify crude scarcity, mirroring the diesel scarcity already priced into the market.