By Joe Wallace
You might be surprised to check your screen this morning and see West Texas Intermediate prices above those for benchmark Brent.
In fact, WTI contracts are still cheaper than comparable Brent prices. The apparent premium is a function of how the two contracts work, and the huge supply shortfall thanks to the effective closure of the Strait of Hormuz.
WTI contracts are for oil delivered to a pipeline junction at Cushing, Okla. Oil changes hands one month after futures contracts expire. Right now, the nearby contract expires in April, for oil that will be delivered in May.
Brent futures in London expire two months before delivery. The next contract in line is for oil transferred in June.
So why does WTI look higher?
When any commodity is in short supply, buyers tend to pay more to take delivery as soon as possible. It's called backwardation, and it's the market's way of dragging supply forward to meet demand, as well as dissuading any purchases that aren't strictly necessary.
Premiums for nearby WTI and Brent contracts have never been larger than in recent days. WTI futures just happen to deliver oil a month earlier.
Are there any other signs of stress?
You can buy Brent cargoes well before the next futures contract delivers in June but it will cost you dearly. In a sign of desperation, buyers are willing to pay almost $30 a barrel more to take the crude a month ahead of time, said Adi Imsirovic, an Oxford University lecturer and former trader. On top of that he estimates they're paying $50 a barrel in insurance and shipping costs.
In a 35-year trading career, Imsirovic said he never saw anything like it. Then again, he added, the world has never lost more than a tenth of its oil and refined fuel supply for an extended period.
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(END) Dow Jones Newswires
April 02, 2026 10:49 ET (14:49 GMT)
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