Middle East conflict pushes up global oil prices, Brent premium over WTI rises to a two-year high

CNBC Finance APP has learned that after the United States and Israel launched attacks on Iran, the situation in the Middle East rapidly escalated, impacting the global energy markets and causing a sharp rise in international oil prices. However, the increase in benchmark crude oil prices showed a clear divergence, with Brent crude being more significantly affected.

As the international benchmark oil price, Brent crude’s rise was noticeably faster than that of the U.S. benchmark West Texas Intermediate (WTI). On Wednesday, ICE Europe Futures Exchange settled May Brent crude futures at $81.40 per barrel, $6.74 higher than the $74.66 per barrel for WTI futures expiring in April on the New York Mercantile Exchange. The spread has risen to its highest level in over two years.

Analysts point out that Brent crude, as the global pricing benchmark, is more sensitive to geopolitical risks, and thus tends to reflect a higher “geopolitical premium” during escalations in Middle Eastern conflicts. Matt Smith, Chief Analyst at Kpler, said that WTI mainly reflects domestic U.S. supply conditions and is somewhat isolated from Middle Eastern developments, resulting in smaller price increases.

Data shows that the spread between Brent and WTI widened to $6.87 per barrel on Tuesday, the largest since November 2023, as the market assessed the impact of the Israel-Hamas conflict on regional energy supplies.

Rob Haworth, Head of Investment Strategy at U.S. Bank Asset Management, stated that since mid-2025, as tensions in the Middle East have continued to escalate and the Russia-Ukraine conflict remains unresolved, the spread between Brent and WTI has been widening. In June 2025, the spread was only about $2.

Typically, the spread between these two benchmarks is around $5 per barrel. Rob Thummel, Senior Portfolio Manager at Tortoise Capital, said that the current widening reflects market concerns over potential global supply disruptions rather than U.S. domestic supply issues.

Brent crude mainly comes from offshore oil fields in the North Sea and is called “shipping-type crude,” while WTI primarily originates from shale oil regions such as the Permian Basin in Texas, transported via pipelines to the Cushing storage and trading hub in Oklahoma, then sent to refineries or exported along the Gulf Coast.

Data released by the U.S. Energy Information Administration on Wednesday shows that WTI crude inventories at Cushing rose to an 18-month high, currently at 26.5 million barrels, up from 24.9 million barrels the previous week. This has somewhat limited the upward potential of WTI prices.

Meanwhile, the tense Middle Eastern situation could lead to a short-term tightening of global crude oil supplies. Due to slowed shipping through the Strait of Hormuz, some Iraqi oil fields have reduced or halted production as storage facilities become increasingly full.

Kpler data indicates that in the Persian Gulf region, the number of fully loaded Very Large Crude Carriers (VLCCs) is increasing, while the number of ballast (empty) ships is decreasing. Analysts suggest that this is because fully loaded tankers cannot leave the Gulf, and empty ships find it difficult to enter ports, creating transportation bottlenecks.

Smith noted that Middle Eastern oil-producing countries have limited land-based storage capacity, so when transportation is obstructed, storage pressures can build. Most oil-producing nations’ inventories are insufficient to cover more than 20 days of production.

To stabilize energy transportation, U.S. Secretary of the Treasury Janet Yellen announced on Wednesday that the U.S. government will implement a series of measures to support Persian Gulf oil trade. The day before, the U.S. government announced it would provide insurance guarantees for oil tankers, and President Trump also stated that if necessary, the U.S. Navy would escort Gulf shipping.

These measures have somewhat alleviated market tensions. On Wednesday, WTI prices briefly fell to $73.28, while Brent prices dipped to a low of $80.30. However, both benchmark prices still saw modest gains for the day.

Shawn Reynolds, Manager of the VanEck Global Resources Fund, said that the recent decline in oil prices was mainly because the market expected the Strait of Hormuz to return to normal shipping sooner than expected. Traders generally believe that the U.S.-Iran situation is unlikely to escalate significantly further.

However, he pointed out that if investors believe the Strait of Hormuz could be closed for weeks or even longer, oil prices could experience a new round of increases.