West Texas Intermediate crude jumped to $111.29 a barrel on Thursday while Brent traded at $107.57, briefly inverting the usual global benchmark spread as markets repriced the value of immediately accessible oil amid a prolonged disruption at the Strait of Hormuz.
The move is notable because Brent, the seaborne benchmark, typically trades at a premium to WTI; that relationship reflects the centrality of waterborne flows to global markets and usually leads price moves during geopolitical shocks. While some of the headline spread was driven by a technical quirk—WTI’s front-month contract still reflects May delivery while Brent has already rolled to June—traders said the deeper force was extreme prompt pressure. WTI’s backwardation has surged to record levels, signaling an urgent demand for barrels that can be loaded and delivered now.
The catalyst for that rush was a collapse in tanker traffic through the Strait of Hormuz after what traders and officials described as a prolonged disruption. The narrow strait typically handles roughly 20% of global oil shipments; with flows severely constrained, cargoes that depend on seaborne transit have become harder to source and price signals tied to those barrels have lost immediacy. “When seaborne flows are restricted, inland benchmarks can temporarily lead,” one market observer said, noting the abrupt shift in demand toward grades not reliant on Hormuz transit.
U.S. crude has gained what traders called a “security premium” because it can be moved, loaded and delivered without transiting the strait. Other accessible grades tracked that bid: Murban crude, a key Middle Eastern grade that does not rely on Hormuz for all shipments, rose nearly 10% in the session. The re-pricing underscores how physical availability can override the usual nominal relationships between contracts in periods of acute logistical stress.
Oil prices overall surged more than 10% after U.S. President Donald Trump said the United States would “hit” Iran “extremely hard” within weeks, comments that came amid reciprocal threats and heightened diplomatic rancor between Washington and Tehran. The president blamed the spike in prices on Iran’s “launching deranged terror attacks against commercial oil tankers and neighboring countries,” remarks that analysts said added to market uncertainty by elevating the prospect of a wider confrontation without offering a clear plan to reopen the Hormuz shipping lane.
European officials are reportedly weighing the formation of a coalition to try to restore oil flows through the strait, a sign that policymakers are considering coordinated action to address the supply choke point. For now, the inversion between WTI and Brent, coupled with record forward-curve distortions, signals that traders are valuing physical deliverability and security more highly than conventional benchmark hierarchy — a development with immediate implications for refining margins, shipping logistics and governments monitoring energy prices.