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• Physical oil can cost about $38 a barrel more to deliver, as tanker rates surge.
• Shell, LNG exporters and refiners stand to gain from tight fuel supplies.
• Tobin Marcus sees a prolonged standoff with Iran.
• Europe’s low gas storage makes winter weather a key variable.

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POWER POINT

What I’m hearing from energy insiders

Oil, in reality, is $125 per barrel or higher.

That’s the real cost of a barrel of oil because buying the physical commodity is a very different story from a number on traders’ screens.

Oil futures are just that: paper contracts indicating a price today, tomorrow, next month or further out.  If you want to buy the physical commodity, it may be a totally different story — and price.

As I’ve reported, prices for oil delivery have skyrocketed. Last week, a VLCC (aka a “supertanker” in non-shipper parlance) was chartered from the U.S. Gulf Coast to China for $76 million. Another very large crude carrier went for $77 million from the U.S. to South Korea. That’s 10 times more than the price of the same trip less than one year ago.

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Assuming these ships hold about 2 million barrels of oil, that charter price means each barrel on the ship costs about $38 over the price of the oil itself.

I’m certainly not saying to avoid looking at oil futures prices, but you need to know that the price on the CNBC screen or CNBC.com isn’t always the full price being paid. These days, any company that needs oil shipped by sea, rail or truck will pay a hefty premium over the price of the oil itself. So, while the volume of oil moving through Hormuz is closing in on pre-war levels, costs are not. And there’s no sign that they’re going anywhere but up.

You know what else is up? The stocks of the shipowners. Look at their moves this month and this year.

***

On a more serious note, I want to express my condolences for the awful attacks on the airport in Riyadh, Saudi Arabia. The cowardly strike on civilians—some of whom were religious pilgrims—took the lives of at least 14 people and injured more than 300.

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The airport was attacked at least three times as travelers and energy industry professionals from around the world were flying into Riyadh for the World Petroleum Council conference. I was scheduled to fly in on Saturday, but the trip was canceled because of the strikes. The WPC went on as planned — here’s one panel that took place Tuesday — and I look forward to seeing all my global energy friends again soon.

Thanks for reading—and watching. Be safe in these crazy and often scary times.

Brian

THE ACTIONABLE INSIDER

The supercap oil and gas stock to watch right now is Shell (SHEL). Shell is not a shell of its former self. It’s back to being what energy investors wanted: a major player in global energy, focused on what it does best. Shareholders are being rewarded.

Shell hit a new high this week. While analysts remain bullish, the stock is getting close to its target price.

Shell may be underappreciated for its huge liquefied natural gas business. RBC analyst Biraj Borkhataria writes: “Without a sustained resumption in Qatari volumes and with European storage levels below seasonal lows heading into winter, European gas prices continued on an upward trajectory in 3Q26. With HH broadly unchanged throughout the summer, export margins have increased to the widest levels seen since 2022, on our estimates nearly double the level in 2Q26 (~$13/mmbtu vs. $7/mmbtu).”

Borkhataria expects Shell and other companies with huge U.S. LNG positions — TotalEnergies (TTE) and BP (BP) — to benefit from wider margins on exports to Europe.

Speaking of RBC and energy, the firm lists ConocoPhillips as one of its top 30 global stock ideas. The company is covered by analyst Scott Hanold, who believes it has a “returns-focused value proposition, a strong balance sheet, and peer-leading distributions.” He loves its “global and diverse” asset base and management’s clear “investment propositions.” Hanold has a $152 target on COP. That’s more than 20% upside.

In oil and gas, refiners and big energy stocks are generating cash for investors, and Morgan Stanley is optimistic more is coming.

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The firm says the diesel shortage is now spilling over into gasoline, potentially marking another leg of the “golden age” for refiners. Morgan Stanley has been revising its earnings estimates higher for companies including ExxonMobil (XOM), Valero (VLO), Phillips 66 (PSX) and PBF (PBF).

Fun Fact →  While nearly every other company calls Texas home, refiner PBF is headquartered in a suburban office park just off a highway in New Jersey.

Two big calls to quickly highlight in power production.

First, Truist says you have to buy First Solar (FSLR). The analyst upgrades it to Buy with a $270 target. Tariffs should help the Phoenix-based company, giving it pricing power for at least four more years. The Section 232 tariffs—which are too complicated to detail here—should help First Solar raise solar module prices and boost earnings. We agree, having written about the company and stock back in July.

Another call on the Power Insider radar: TD Cowen is starting coverage of TeraWulf (WULF) with a Buy rating and a $21 target. That indicates about 50% upside for the stock, but it’s actually one of the Street’s lower price targets. TeraWulf and other AI power companies have seen their stocks hit hard following months of big gains, but Cowen analyst Michael Elias says the valuation is now attractive and a likely lease in the second half of 2027 at a Kentucky location could be a catalyst.

TAKE A LOOK

In the wake of the terror attacks on Saudi Arabia, we spoke with RBC Capital Markets’ Helima Croft about the attacks, energy and more.

watch nowVIDEO04:28RBC’s Helima Croft on oil prices: We’re in a transportation crisisPower Lunch

INSIDE LINE

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RANDOM, BUT INTERESTING

The entire energy world is watching Europe’s natural gas storage levels. The question is whether the continent will have enough gas to make it safely through the winter. Power Insider wrote about the topic in the last issue.

The fact that JPMorgan highlights expected weather patterns should tell you how much temperature matters when it comes to gas storage. The early forecast calls for October and November to be average or slightly warmer than the 10-year average. The red line represents the 10-year average.

Europe has been largely “saved” by mild temperatures over the past few years. Natural gas storage levels are lower this year than in years past, so the thermometer will matter a lot when it comes to how well countries can, ahem, weather the winter. Random, but interesting.

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THE GRID

Container ship sinks in Strait of Hormuz as Iran steps up attacks

Iran says it’s ‘counting the moments’ until it can strike U.S. warships

Diesel squeeze set to last well into 2027 as Iran war disrupts supply, IEA says

Catch up with more on energy including interviews and video content from CNBC and Power Insider.   

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