Middle East conflict pushes global oil prices higher, Brent's premium over WTI rises to highest level in over two years.

After the United States and Israel launched attacks on Iran, the situation in the Middle East escalated rapidly, impacting the global energy market and causing a significant increase in international oil prices. However, there is a clear differentiation in the price increase of different benchmark crude oils, with Brent crude oil being more significantly affected. As an international benchmark oil price, the speed of increase in Brent crude oil is significantly faster than the U.S. benchmark West Texas Intermediate (WTI) crude oil. On Wednesday, ICE Europe Futures Exchange's May delivery Brent crude oil futures closed at $81.40 per barrel, which is $6.74 higher than the $74.66 per barrel for the WTI crude oil futures for April delivery on the New York Mercantile Exchange. The price difference between the two has reached the highest level in over two years. Analysts point out that Brent crude oil, as a global pricing benchmark, is more sensitive to geopolitical risks, and therefore usually reflects a higher "geopolitical risk premium" during Middle East conflicts. Matt Smith, chief analyst at Kpler USA, said that in contrast, WTI mainly reflects the U.S. domestic supply situation and is somewhat isolated from the Middle East situation, leading to a smaller increase. Data shows that the price difference between Brent and WTI widened to $6.87 per barrel at one point on Tuesday, the highest level since November 2023. At that time, the market was assessing the impact of the conflict between Israel and Hamas on regional energy supply. Rob Haworth, investment strategy director at Bank of America Asset Management, said that since mid-2025, as tensions in the Middle East continued to escalate and the Russia-Ukraine conflict remained unresolved, the price difference between Brent and WTI has continued to widen. In June 2025, the price difference was only about $2. Usually, the price difference between the two benchmark crude oils is around $5 per barrel. Rob Thummel, senior portfolio manager at Tortoise Capital, said that the current widening of the price difference reflects the market's greater concern about global supply disruptions rather than domestic supply issues in the U.S. Brent crude oil mainly comes from offshore oil fields in the North Sea, known as "seaborne crude oil", while WTI mainly comes from shale oil production areas such as the Permian Basin in Texas, transported by pipeline to the storage and trading center in Cushing, Oklahoma, before being transported to refineries or exported along the Gulf Coast in Mexico. Data released by the U.S. Energy Information Administration on Wednesday showed that crude oil inventories at the WTI pricing hub in Cushing reached a 18-month high, with current inventories at 26.5 million barrels, higher than the 24.9 million barrels from the previous week. This to some extent suppressed the upward pressure on WTI oil prices. Meanwhile, tensions in the Middle East may lead to a temporary tightening of global crude oil supply. As shipping speeds slow down in the Hormuz Strait, some oil fields in Iraq have reduced or suspended production as storage facilities are gradually filled. Data from Kpler shows that the number of very large crude carriers full of oil in the Persian Gulf region is increasing, while the number of empty tankers is significantly decreasing. Analysts point out that this is because tankers filled with oil cannot leave the Gulf, while empty ships are also struggling to enter ports, leading to transport bottlenecks. Smith said that land storage capacities in oil-producing countries in the Middle East are limited, therefore facing storage pressure in case of transportation disruptions. Most oil-producing countries do not have storage capacities to cover production for more than 20 days. To stabilize energy transport, U.S. Treasury Secretary Benson announced on Wednesday that the U.S. government will introduce a series of measures to support oil trade in the Persian Gulf. The day before, the U.S. government announced that it would provide insurance coverage for tankers, and President Trump also stated that if necessary, the U.S. Navy would provide escorts for Gulf shipping. These measures have somewhat alleviated market tensions. On Wednesday, WTI oil prices fell to $73.28 at one point, while Brent oil prices reached a low of $80.30. However, both benchmark oil prices remained slightly higher on that day. Shawn Reynolds, manager of the VanEck Global Resources Fund, said that the previous drop in oil prices was mainly due to market expectations that the Hormuz Strait might return to normal shipping sooner than expected. Traders generally believe that further significant escalation of U.S.-Iran tensions is unlikely. However, he pointed out that if investors believe that the Hormuz Strait may be closed for four weeks or even longer, oil prices could still see a new round of increases.