North Dakota Oil Sells at Premium for First Time in Decades Amid Supply Disruptions
North Dakota's oil industry experienced an unusual phenomenon in May, where the state's crude oil sold for a premium of $2.56 per barrel above the West Texas Intermediate (WTI) benchmark price. This anomaly had not occurred in decades, with Justin Kringstad, director of the North Dakota Pipeline Authority, stating that he had to go back to 1986 to find a similar event.
The high prices were due to oil supply disruptions caused by the Iran war and the closure of the Strait of Hormuz, which led to increased demand for oil at hubs like the one at the end of the Dakota Access Pipeline. As a result, North Dakota's oil prices skyrocketed to an average market price of $100.64 per barrel in May.
The premium paid for North Dakota oil resulted in a significant increase in state revenue, with Kringstad estimating that the state received approximately $29 million more in oil tax revenues than it would have under normal circumstances. This is a substantial increase, given that the average market price was 70.6% higher than the state's revenue forecast.