The difference between Brent and U.S. West Texas Intermediate (WTI) crude prices surged in early trading yesterday, nearing an 11-year high, as tensions in the Middle East intensified supply concerns.
Brent crude climbed past $114 per barrel, while WTI rose to $96 per barrel, widening the gap to about $18 per barrel—a divergence not seen since mid-2010s market disruptions.
Seaborne crude markets are under mounting pressure following repeated attacks on Gulf energy infrastructure, including strikes on Iran’s South Pars gas field. Brent prices are particularly sensitive to potential interruptions in the Strait of Hormuz, while U.S. supplies remain relatively stable, keeping WTI prices steadier.
The disparity is also visible in physical markets, with Middle Eastern benchmarks reaching record levels—Oman crude at around $153 per barrel and Dubai near $136 per barrel.
For import-dependent nations, the effects are starting to show downstream. In India, the official crude import basket jumped to $146.09 per barrel on Tuesday, more than double the February average of $69. Analysts warn that state-run fuel retailers could face escalating losses unless pump prices are adjusted or government support is provided.
Estimates suggest that with crude above $110 per barrel, petrol and diesel margins could swing by about $6.3 per litre, while LPG losses may rise by roughly $10.2 per kg, potentially adding billions to annual under-recoveries. Every $10 increase in crude prices could add $14–16 billion to import bills, boosting inflationary and fiscal pressures if retail adjustments lag.
Experts note that Dubai and Oman benchmarks now better reflect physical market tightness, as exportable crude in the region becomes scarcer even while headline benchmarks remain more contained.
The widening Brent-WTI spread highlights a structural split: Brent prices reflect immediate global disruption risks, while WTI remains anchored by U.S. inventories, steady shale output, and potential policy actions such as strategic reserve releases. Traders are increasingly watching the spread as a real-time measure of how the Middle East conflict is constraining global crude supply.
