The Brent-WTI Spread is Mysteriously High

The two most widely traded oil benchmarks are West Texas Intermediate and Brent Crude. WTI is the benchmark for North American crude oil while Brent is the benchmark for Europe and the Middle East. The two grades are very close in quality, and historically have traded at very similar prices.

However, the spread between WTI and Brent started widening in 2017, and by early this year traders were largely united in suggesting that we’d reached a peak and it was time to become bearish on Brent. They were wrong:

The Brent-WTI spread did indeed start to narrow in March, but only for a short while. In May the spread took off like a rocket and currently stands at nearly 22 percent. This is a historical high aside from the period following the Arab Spring, when fears about Arab oil supply drove Brent prices well above WTI. Today, though, there’s nothing like the Arab Spring to explain what’s happening. There have been some vague notions floating around that Iran might try to close the Hormuz Strait, but nothing that seems very serious. And WTI inventories are up a bit, but not by enough to really explain anything.

So what’s going on? And does it mean anything serious?

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you'll agree is worth supporting.

payment methods

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you’ll agree is worth supporting.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate