News
04/03/26
US Gulf crude premiums near 6-year high on Iran war
Houston, 4 March (Argus) — US Gulf medium sour and heavy sweet grades surged
Tuesday to their highest premiums over the Cushing, Oklahoma, benchmark since
April 2020, the early days of the Covid-19 pandemic, supported by the near-halt
of Middle Eastern exports because of the war in Iran. Medium sour and heavy
sweet crudes have been especially supported by the effective suspension of crude
and product exports through the strait of Hormuz following US and Israeli
attacks on Iran that began on 28 February, sparking retaliatory strikes from
Iran on targets in the region. Much of the disrupted crude is of similar quality
to US Gulf grades and the region is also a major exporter of middle distillates,
boosting prices for both significantly. Prompt-month April medium sour Mars
traded between $3.75-$5/bl over Domestic Sweet (DSW), while medium sour Southern
Green Canyon (SGC) reached a $3/bl premium on Tuesday . Distillate-rich Heavy
Louisiana Sweet (HLS) rose as high as a $5.25/bl premium. Volume-weighted
averages jumped by roughly $1.15-$2.15/bl from the prior session. These gains
came alongside a sharp rise in the Nymex WTI price for DSW, which settled at at
$74.56/bl Tuesday, about $7.50/bl higher than on 27 February, the last trading
day before the Israeli-US attacks on Iran. Outright assessments for the three
grades were between $77-80/bl. Their premiums have not been higher since April
2020 when differentials rose to partially offset the benchmark price collapse
when storage capacity rapidly filled in the wake of Covid-19 related lockdowns
and increased Saudi Arabian output. ME source of 24pc US crude imports Middle
Eastern crudes accounted for about 24pc of all US waterborne crude imports from
November 2025-February 2026, according to analytics platform Vortexa, or 587,000
b/d. Of the 277,000 b/d delivered to the US Gulf coast in that time, about 95pc
was medium sour. Of the medium sours, US Gulf coast buyers imported roughly
189,000 b/d of Arab Light and 24,000 b/d of Arab Medium from Saudi Arabia and
51,000 b/d of Iraqi Kirkuk. Kirkuk imports resumed in November after the
reopening of the Kirkuk–Ceyhan pipeline. The remaining Middle Eastern crude
volumes to the US Gulf coast originated in those two nations or Kuwait. Total
imports of Middle Eastern crude were up by 65pc from the same period a year
earlier, alongside the unwinding of Opec+ production cuts and lower relative
prices. National oil companies for Saudi Arabia, Iraq and Kuwait, sell crude to
the US at a differential to the Argus Sour Crude Index (ASCI). ASCI is a
volume-weighted average of US Gulf deepwater sour crude deals for Mars, Poseidon
and SGC. Rising offshore production had been weighing on US Gulf sours and the
ASCI price in recent months, and official selling price differentials have also
moved lower, also making US imports from the three countries more economical
than in the past. Additionally, global middle distillate prices have rallied
this week, including at the US Gulf coast. US Gulf coast jet fuel prices reached
a 29-month high on Tuesday and diesel prices made strong gains. In contrast to
the medium sours and HLS, light sweets WTI Houston and Light Louisiana Sweet
(LLS) premiums, although still high, have made smaller gains and are at their
highest levels since only last year. US Gulf refiners import little light crude
given robust domestic production. But Asia-Pacific refiners that depend on Abu
Dhabi's light sour Murban are looking more to WTI as an alternative, given
Murban's surging prices and the difficulty of getting vessel insurance on
cargoes in the Mideast Gulf region. Indonesia is considering importing more
non-Middle Eastern crude, including from the US, for supply security. But most
of its imports from the region are Saudi Arabian medium sours, which could lend
further support to the similar US grades. By Amanda Smith Send comments and
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