Asia and Europe grabbed American oil: WTI has become more expensive than the benchmark Brent

Stopping oil exports from The Persian Gulf because of the Iranian war left Asian refineries without large volumes of raw materials, and they entered into competition with Europe for American oil. The cost of the WTI variety exceeded the price of the reference Brent.

In April, more than a month after the start of the Iranian war, the cost of American WTI oil exceeded the price of the benchmark Brent, which is traditionally traded more expensive than the American one. So, on April 7, the cost of Brent is $ 108.8 per barrel, and WTI is $ 112.4. At the same time, physical supplies are even more expensive for refineries.

This situation has developed due to the fact that Asian refineries have lost large volumes due to the suspension of exports from The Persian Gulf through the Strait of Hormuz and began competing with European plants for American oil.

"Spot premiums for US West Texas Intermediate crude oil have jumped to record high levels amid heightened competition between Asian and European refineries for supplies designed to replace Middle Eastern oil supplies disrupted by the war with Iran," Reuters writes.

Europe is the largest buyer of American oil, but the situation may change.

"Asian refineries, deprived of access to Middle Eastern supplies, are aggressively fighting for every available barrel of oil from the Atlantic basin," said Paola Rodriguez—Maciu, chief oil analyst at Rystad Energy.

According to traders, WTI Midland oil for delivery to North Asia in July on supertankers is sold at a premium of $ 30-40 per barrel, depending on the benchmark used.

"One trader estimated the premium at $34 per barrel in relation to quotations in Dubai, and the other at $ 30 per barrel in relation to the dated Brent rate. Two others said that the offers approached $ 40 per barrel relative to the August Brent rate on ICE," Reuters writes.

"There is a new price every day," one of the traders said, adding that Asian refineries are suffering serious losses due to premiums.

"With the current physical differentials and freight rates, European refineries that buy oil on the spot market cannot make money on refining these barrels," said Paola Rodriguez-Maciu.

Meanwhile, Russian oil has also risen in price to almost record levels. Its average price reached $ 120 per barrel, which is twice as high as in the state budget of Russia. Refineries buy up any oil available on the market.

As EADaily reported, oil prices jumped by about 60% due to the Iranian war. Approximately 20% of all world oil and gas supplies pass through the Strait of Hormuz. Saudi Arabia and the UAE are redirecting part of the volumes through oil pipelines, but this is not enough. And the main question now is how long the Iranian war will last.