North American Oil Sees Surge in Demand Amid Global Crude Shortage
The global oil market is experiencing a shortage of accessible crude, leading to rising demand for North American oil. The price of Bakken oil traded at the Clearbrook, Minnesota hub shot up to an $18 premium to West Texas Intermediate (WTI) on Monday, compared to a $1.20 discount the day before the Iran war erupted on February 28.
This surge is attributed to the increasing demand for U.S. exports, with refiners competing with rivals in Asia and Europe for barrels after weeks of strangled shipments via the Strait of Hormuz. As a result, oil grades from Texas and North Dakota to Alberta are surging, including synthetic crude produced by processing oil-sands bitumen, which traded at a $19.90 premium to WTI.
However, not all Canadian oil is experiencing a surge in price. The discount to WTI for Western Canadian Select widened to $16.25 from $14.65 amid rising volumes of Venezuelan crude. Traders note that U.S. and Canadian oil are being drawn to coastal markets for export, tightening local spot supplies.
Dennis Kissler, head of energy trading at BOK Financial Securities Inc., attributed the surge in WTI prices to increased exports: 'It's all about U.S. exports.'