Futures are just paper prices: the “real bill” for a barrel of oil will cost $30-40 more, and shipowners and refiners will benefit from it

The Zhitong Finance App learned that market watcher Brian Sullivan said that the price of oil actually reached 125 US dollars per barrel or more. He pointed out that this is the true cost of each barrel of crude oil, because buying physical commodities is exactly the same thing as the number that pops up on the trader's screen.

Crude oil futures are essentially just paper contracts, showing prices for today, tomorrow, next month or more. If you want to buy physical crude oil, the situation may be quite different — and so is the price.

According to previous reports, crude oil transportation prices have skyrocketed. Last week, a VLCC (supertanker) sailed from the US Gulf Coast to China, and the rent was as high as 76 million US dollars. Another very large crude oil carrier sailed from the US to South Korea at a rent of 77 million US dollars. That's 10 times more expensive than the same route less than a year ago.

Assuming that these ships can carry about 2 million barrels of crude oil, then this rent means that the cost of each barrel of crude oil on board is about 38 US dollars higher than the price of oil itself.

This is not to say you should avoid paying attention to crude oil futures prices, but what you need to know is that the price shown on the trading screen is not always the full price actually paid. Today, any company that needs to transport crude oil by sea, rail, or truck has to pay a hefty premium on top of the price itself. As a result, although the amount of crude oil transported through the Strait of Hormuz is close to pre-war levels, there is no cost. Moreover, there is no sign that costs will decline; they will only continue to rise.

Shipowners and refiners will benefit

Currently, the high-capitalization oil and gas stock worth watching is Shell (SHEL.US). Shell is no longer the empty shell of its former name; it is once again what energy investors are looking for: a major player in the global energy sector, focusing on what they do best, and shareholders are reaping rewards.

Shell hit a new high this week. Although analysts are still bullish, the stock price is close to its target price.

Shell's huge liquefied natural gas business is probably undervalued. Royal Bank of Canada (RBC) analyst Bilaj Bolhattaria wrote, “European gas prices continued to rise in the third quarter of 2026 as Qatar supply did not continue to recover and European inventory levels fell below seasonal lows and entered winter. As prices in Port Henry (HH) remained generally flat throughout the summer, export profit margins have expanded to the widest level since 2022, and according to our estimates, it is close to double that of the second quarter of 2026 (about $13 per million British thermal units, compared to 7 US dollars/million British thermal units).”

Bolhattaria anticipates that Shell and other companies with large US LNG business exposure — Total Energy (TTE.US) and British Petroleum (BP.US) — will benefit from increased profit margins on exports to Europe.

Speaking of Royal Bank of Canada and Energy, the bank added ConocoPhillips (COP.US) to its list of the top 30 preferred stocks in the world. The company is covered by analyst Scott Harnold, who believes ConocoPhillips has “a return-centered value proposition, a strong balance sheet, and industry-leading shareholder returns.” He is optimistic about its “global and diversified” asset portfolio and management's clear and clear “investment proposition.” Harnold gave ConocoPhillips a target price of 152 dollars, which has more than 20% upside compared to the current price.

In the oil and gas sector, refiners and large energy stocks are generating cash for investors, and Morgan Stanley is optimistic that more returns will follow.

The bank said that the shortage of diesel is currently spilling over into the gasoline market, which may mark another round of “golden age” for refiners. Morgan Stanley has raised profit forecasts for several companies, including ExxonMobil (XOM.US), Valero Energy (VLO.US), Phillips 66 (PSX.US), and PBF Energy (PBF.US).