The Brent crude market structure and some physical markets in Europe and Africa are reflecting tighter supply resulting partly from concern about shipping delays due to vessels avoiding the Red Sea, according to traders, LSEG data and analysts.
The disruptions have combined with other factors such as outages and rising Chinese demand to increase competition for crude supply that does not have to transit the Suez Canal, and analysts say this is most evident in European markets.
In a sign of tighter supply, the structure of the benchmark Brent crude futures market hit its most bullish in two months on Friday, as tankers diverted from the Red Sea following air strikes by the United States and Britain on targets in Yemen.
"Brent is the most impacted futures contract when it comes to Red Sea - Suez Canal disruptions," said Viktor Katona, lead crude analyst at Kpler.
"So who suffers the most on the physical front? Undoubtedly, it's European refiners."
The premium of the first-month Brent contract to the six-month contract rose to as much as USD 2.15 a barrel on Friday, the highest since early November. This structure, called backwardation, indicates a perception of tighter supply for prompt delivery.
The nearby month of the US crude market shifted into a backwardation this week, albeit a shallower one than Brent, reflecting nearby tightness.
In the North Sea crude market, the differential of Forties crude to benchmark dated Brent has reached the highest since late November and the prices of some other grades considered a local alternative to Middle East crude have soared.
The price of Norway's Johan Sverdrup crude, an alternative to medium sour Middle East crude, started to jump in December and has risen more in January, trading at a USD 2.80 premium to dated Brent, up from a more than USD 2 discount before the disruptions.
The rise in Johan Sverdrup demand could be at least partly linked to worries around delays to Middle East crudes arriving in Europe, trading sources said.