US Gulf spot pipeline crude values rose today against Nymex-quality WTI following the US-Israeli attacks over the weekend, but Americas waterborne markets were more tentative.
Large gains were seen for US Gulf medium sour and heavy sweet pipeline crude values, supported by disruption risks for Middle Eastern crude supplies to the US, as well as by strong distillate prices. Crude and diesel are among the global commodities seeing price support with traffic through the strait of Hormuz largely coming to a halt on Iranian threats to attack vessels there.
In the April US physical spot market, Louisiana-delivered medium sour Mars traded at least as high as $3/bl over its April Cushing, Oklahoma, basis today — up from about $1.50 on 27 February. Thunder Horse traded as high as a $5.50/bl premium to the basis, about $2/bl higher from last week. Heavy Louisiana Sweet traded as high as a $3.25/bl premium to the benchmark, up from a premium of about $1.20/bl.
Texas-delivered Southern Green Canyon returned to a premium to the Cushing benchmark, at $1.50/bl, which was at least $2/bl higher than in the previous session.
US buyers may need to replace expected Middle Eastern crude purchases with domestic supply. Last year the US imported roughly 490,000 b/d in crude from Persian Gulf nations, according to US Energy Information Administration data.
Market discussions on Monday suggested at least some traders think the current level of escalation will be short-lived.
A change in demand for US crude exports to other regions was slow to emerge. Record high freight rates and long-distance shipping times make it challenging for US exports to replace Middle Eastern crude at short notice.
