You're assuming that the price of physical oil is independent of the futures market. In reality, the major gulf producers have set their prices using the future

You're assuming that the price of physical oil is independent of the futures market. In reality, the major gulf producers have set their prices using the futures market since '99. There's a good explanation of the mechanism here: http://peakoildebunked.blogspot.com/2008/07/366-futures-prices-determine-physical.html http://peakoildebunked.blogspot.com/2008/07/366-futures-pric... In addition, though it's admittedly circumstantial evidence, the run-up in oil coincides quite nicely with this and the relaxation of restrictions against large-scale speculation in the futures markets.