Pumped heavy grades in the US hit their highest levels in years on Wednesday, driven by ongoing US and Israeli operations against Iran and subsequent retaliation.
As a result of the retaliation, comparable oil exports from the Middle East decreased and international oil standards were raised. Reuters Reported.
Brent crude reached its highest point since January 2025.
Middle East supply pressures have pushed up heavy crude oil prices from the United States, Canada and Venezuela.
Iran has responded to the Epic Ferry operation by threatening to target ships passing through the Strait of Hormuz, a key shipping route from its southern coast.
The development effectively blocked the passage, blocking nearly one-fifth of the world’s oil supply and causing many ships to anchor outside the strait.
The disruption has led to increased costs for refiners, which may be reflected in higher consumer prices for gasoline and diesel fuel.
Mars crude from the US Gulf of Mexico traded at a $5.50 premium to West Texas Intermediate (WTI) crude, the highest level since April 2020. This represents an increase of $1.75 from the previous day.
Concerns are growing among oil-producing countries. Iraq has indicated that if the movement of tankers in the Gulf is blocked, its daily production will be reduced by more than three million barrels.
This situation is forcing refiners in countries like India, South Korea and the US to look for alternative sources for Iraq’s Basra oil.
With Middle Eastern supplies dwindling, buyers in countries like India and China may increasingly turn to Canada for their heavy crude needs.
The Trans Mountain Pipeline, which carries heavy crude from Alberta to British Columbia for export, is currently operating at full capacity.
Venezuela is also reportedly offering heavy crude at higher prices.
Additionally, in the United States, rising gas prices may present political challenges ahead of November’s midterm elections.
For the first time since November of last year, gas prices have risen above $3 per gallon.
Diesel prices also rose, with Tuesday’s closing price reaching $3.19/gal, the highest since October 2023, and reaching $3.45.
According to analysts and traders, diesel stocks have dwindled sharply due to high demand due to harsh winter conditions in the United States.
U.S. WTI crude traded at a significant discount of up to $8.75 per barrel (bbl) to Brent crude, reflecting expectations that U.S. supplies will remain less affected by global events.
