CNBC's Sullivan says physical oil's real price is $30-$40 above futures

CNBC's Brian Sullivan says the real cost of physical crude oil is far above the futures prices shown on trading screens. In a CNBC commentary, he writes that oil in reality is $125 per barrel or higher, because buying the physical commodity involves shipping costs that paper contracts do not capture.

Shipping costs and physical oil Futures are paper contracts that indicate a price today, tomorrow or further out. To move actual oil, companies charter vessels, rail or trucks, and pay hefty premiums. Sullivan points to two VLCC, or supertanker, charters: one from the U.S. Gulf Coast to China for $76 million, and another from the U.S. to South Korea for $77 million. That is 10 times the price of the same trip less than a year earlier. Assuming about 2 million barrels per ship, the charter price adds about $38 per barrel over the oil price. He says oil volumes through Hormuz are nearing pre-war levels, but costs are not, and he sees no sign that costs will stop rising.

Riyadh attacks and energy conference Sullivan also offers condolences for attacks on the airport in Riyadh, Saudi Arabia. The airport was attacked at least three times, killing at least 14 people and injuring more than 300. The strike hit civilians, some of whom were religious pilgrims, as travelers and energy industry professionals flew in for the World Petroleum Council conference. Sullivan was scheduled to fly in on Saturday but canceled because of the strikes. The conference went ahead as planned.

Energy stocks and gas markets On markets, Sullivan highlights Shell, which hit a new high this week. RBC analyst Biraj Borkhataria says European gas prices kept rising in the third quarter of 2026 as storage levels sat below seasonal lows and Qatari volumes did not sustainably resume. With U.S. Henry Hub prices broadly unchanged, export margins reached their widest since 2022, nearly double the second-quarter 2026 level, at about $13 per mmbtu versus $7. Borkhataria expects Shell, TotalEnergies and BP to benefit from wider U.S. LNG export margins.

RBC also lists ConocoPhillips among its top 30 global stock ideas. Analyst Scott Hanold cites a returns-focused value proposition, a strong balance sheet and peer-leading distributions, with a $152 target implying more than 20% upside.

Morgan Stanley says a diesel shortage is spilling into gasoline and could mark another leg of a golden age for refiners. It has raised earnings estimates for ExxonMobil, Valero, Phillips 66 and PBF.

Truist upgraded First Solar to Buy with a $270 target, saying tariffs should give the Phoenix-based company pricing power for at least four more years. TD Cowen started coverage of TeraWulf with a Buy rating and a $21 target, about 50% upside and one of the Street's lower targets. Analyst Michael Elias says the valuation is attractive and a likely lease in Kentucky in the second half of 2027 could be a catalyst.

Europe's natural gas storage remains a focus. Sullivan notes JPMorgan's early forecast calls for October and November to be average or slightly warmer than the 10-year average. Europe has been helped by mild temperatures in recent years, but storage is lower this year, making weather important for winter.

Source: CNBC Top News.