Crude markets tightened on March 18 as Brent surged and the gap between the global benchmark and U.S. West Texas Intermediate widened to the largest level in more than a decade, sparking renewed interest in shipping American crude overseas.
During trading on Wednesday, U.S. WTI futures traded as much as $12.05 a barrel below Brent - the widest discount since March 2015. The divergence has been driven by a rally in Brent after attacks on Middle Eastern oil infrastructure, while rising U.S. supply and inventory dynamics have exerted downward pressure on domestic futures.
Those attacks - which also hit Iran's sizeable South Pars gas field - and threats to Gulf energy targets pushed Brent higher by 3.8% on Wednesday, according to market moves observed during the session. By contrast, WTI gained only 0.1% over the same period. The asymmetric reaction left Brent markedly stronger than U.S. crude.
Traders typically respond to such differentials by moving barrels toward higher-priced markets, and market participants said the current spread is large enough to make exports from the U.S. Gulf Coast commercially attractive despite rising freight costs. Georgios Sakellariou, a chartering analyst at Signal Maritime, said the freight for an Aframax vessel carrying up to 700,000 barrels from the U.S. Gulf Coast to Europe increased to about $6 million on Wednesday from roughly $4.36 million before the conflict intensified.
"Today we saw more crude cargoes getting picked up from the U.S. Gulf Coast for loading in March to the start of April because of the widening WTI/Brent spread," Sakellariou said. He added that more ballast vessels are expected to head to the U.S. in the coming days to load crude destined for Europe.
Sparta Commodities analyst Neil Crosby described the market moves as primarily driven by infrastructure attacks: "Brent is ripping on South Pars; I think infrastructure attacks will be the main driver of more Brent rallies rather than anything else, and that tends to be reflected in Brent over WTI." He added that WTI now looks very cheap in arbitrage terms and "will go nicely to Europe," suggesting U.S. export loadings could increase in the coming weeks given the current spread.
At the same time, several developments are applying downward pressure to WTI. Members of the International Energy Agency agreed to release 400 million barrels from reserves to help dampen prices, with the United States set to release 172 million barrels from its Strategic Petroleum Reserve. Rohit Rathod, a senior analyst at Vortexa, said the SPR release is putting pressure on WTI.
Commercial inventories at Cushing, Oklahoma - the delivery and pricing point for WTI futures on the New York Mercantile Exchange - also rose. The Energy Information Administration reported that stocks at Cushing increased last week to 27.52 million barrels, the highest level since August 2024. Market participants noted that this build, together with the planned SPR release, is suppressing WTI.
Still, there is a practical limit to how much crude can flow out of the United States, analysts cautioned. Growing demand to export U.S. crude could lift freight rates further to the point where the shipping economics are no longer viable, which would close the arbitrage and cap export volumes. The exact threshold at which freight costs negate the WTI/Brent advantage was not specified by sources, but the trade-off between rising shipping costs and the available price differential is a key determinant of future flows.
Market context
- Brent's gains were driven by attacks on Middle Eastern energy infrastructure and threats to Gulf energy targets.
- WTI traded at a $12.05 per barrel discount to Brent at its session low, the widest since March 2015.
- Freight for an Aframax voyage from the U.S. Gulf Coast to Europe rose to about $6 million from $4.36 million prior to the conflict.
- IEA members agreed to a coordinated release of 400 million barrels, with the U.S. releasing 172 million barrels from the SPR.
- Cushing stocks rose to 27.52 million barrels, the highest since August 2024, according to the EIA.