Oil prices rose yesterday ahead of a deadline set by US President Donald Trump for Iran to open the Strait of Hormuz or face attacks on power plants and other infrastructure.
Brent crude futures were up 17 cents, or 0.2 per cent at $109.94 a barrel while US West Texas Intermediate crude was close to a four-week high at $115.3 a barrel, up $2.89 or 2.6pc.
Typically WTI trades at a discount to Brent, but this has reversed in a market where barrels for earlier delivery command a higher price. The benchmark WTI contract is for May delivery while Brent is for June.
“What appears to be a shift in relative value is, in reality, a reflection of how aggressively the market is pricing immediacy,” Saxo bank analyst Ole Hansen said in a note.
Disrupted exports from Gulf oil producers have sent oil prices soaring. This has meant a financial windfall for those still able to export – Iran, Oman and Saudi Arabia – while other states have lost billions of dollars, a Reuters analysis found.
Alongside the unusual US crude oil futures premium over Brent, the conflict has sent spot premiums for WTI crude surging to record highs as Asian and European refiners scramble to replace Middle Eastern supply.
State oil firm Saudi Aramco raised the official selling price of its Arab Light crude to Asia for May delivery, setting a record premium of $19.50 a barrel above the Oman/Dubai average.
Kazakhstan’s energy ministry said its oil exports via the Black Sea were stable a day after Russia said Ukrainian drones had hit the Caspian Pipeline Consortium’s terminal, which handles 1.5pc of global oil supply.
Opec+ oil producing nations agreed on Sunday to raise their May oil output quotas by 206,000 barrels per day, though the increase will be largely notional as key members cannot boost production because of the Hormuz closure.
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