North Dakota Oil Fetches High Premium for First Time in Decades

North Dakota oil fetched a high premium in May for the first time in over four decades. According to Justin Kringstad, director of the North Dakota Pipeline Authority, crude oil produced in the state sold at an average price of $2.56 more per barrel than the West Texas Intermediate benchmark price that month.

This anomaly is significant because oil from North Dakota typically sells at a discount compared to WTI due to transportation costs. However, disruptions caused by the Iran war and the closure of the Strait of Hormuz led to higher prices for oil at hubs like the one connected to the Dakota Access Pipeline.

As a result, North Dakota collected an estimated $29 million more in oil tax revenue than it would have if the average discount over the previous 12 months had still been in effect. The state's average market price for a barrel of oil was $100.64, which is 70.6% higher than its revenue forecast.

While this premium may be temporary, indicators suggest that North Dakota's oil production levels will remain stable due to rising well completions and drilling permits.