Brent-WTI Spot Spread Widens to $13.42 as UKMTO Logs Two Tanker Strikes in Seven Hours

The gap between physical Brent and WTI crude widened to $13.42 per barrel on Oct. 21, according to U.S. Energy Information Administration spot price data, from $7.33 a day earlier. The EIA's Europe Brent spot price rose to $117.37 while its WTI spot price at Cushing, Oklahoma, fell to $103.95. The move came as UK Maritime Trade Operations logged two tanker strikes in about seven hours.

UKMTO Reports Tankers Struck Off Al Faw, Iraq, and Bukha, Oman

UKMTO said the master of a tanker reported being struck by an unknown projectile 30 nautical miles southeast of Al Faw, Iraq, at 1830 UTC on Oct. 20, with the crew safe and no damage or environmental impact reported. At 0145 UTC on Oct. 21, local authorities reported that a tanker was struck 11 nautical miles west of Bukha, Oman, starting a fire that was extinguished. The tanker is at anchor and all crew are reported safe.

UKMTO also issued an advisory on Oct. 20 about an incident involving a tanker and military forces about 121 nautical miles east of Duqm, Oman. It advised vessels to transit with caution and report suspicious activity.

Over three sessions, Brent spot moved from $118.82 on Oct. 19 to $115.22 on Oct. 20 and $117.37 on Oct. 21, while Cushing WTI fell from $110.01 to $107.89 and then $103.95. The WTI decline after the November NYMEX contract expired on Oct. 20 accounts for most of the widening, Oil Authority calculations.

Brent-WTI Spot Spread Worth $26.8 Million per Supertanker Cargo

A $13.42 spread is worth about $26.8 million on a 2 million barrel very large crude carrier cargo of U.S. crude sold against Brent-linked prices, before freight, insurance and quality adjustments, Oil Authority calculations. A day earlier, at $7.33, the same cargo carried a gross spread of about $14.7 million.

The futures market showed a smaller move. ICE Brent December settled at $108.82 on Oct. 21, up 3 cents, so the EIA's Cushing spot price was $4.87 below Brent futures. The difference between spot and futures spreads shows how much of the move sits in prompt physical barrels rather than in the forward curve. Our report on the spot gap covers the previous swing.

Record Tanker Rates Cut Into U.S. Exporters' $13.42 Brent-WTI Spread

The EIA said in its October Short-Term Energy Outlook that tanker rates reached record levels in September, reflecting higher insurance costs and longer routes around conflict zones. For U.S. exporters, the wider Brent premium is an incentive to ship, while freight absorbs part of it. Every $1 change in the spread moves the gross value of a 2 million barrel cargo by $2 million.

U.S. crude exports fell to 3.442 million barrels per day in the week ended Oct. 16 from 4.570 million, according to the EIA's Weekly Petroleum Status Report, as covered in our inventory report.

IEA Gulf Export Data and Saudi Energy Ministry Shaybah Statement

The International Energy Agency said in its Oct. 14 Oil Market Report that Gulf crude exports reached 13.9 million barrels per day in September, more than 75% of pre-war levels, while product exports were 1.9 million barrels per day against 4.7 million before the war. The EIA estimates regional crude shut-ins at 4.77 million barrels per day in September and forecasts 4.47 million in the fourth quarter.

Saudi Arabia's Ministry of Energy said on Oct. 21 that debris from a drone intercepted near the Shaybah oilfield killed two people but did not affect the field's main operations, as covered in our Shaybah report.

U.S. Imports of Canadian Crude Rise to 3.90 Million Bpd

U.S. crude imports from Canada rose to 3.902 million barrels per day in the week ended Oct. 16, according to the EIA. Alberta Treasury Board and Finance reported the WTI-WCS differential at US$24.96 on Oct. 15. A wider Brent premium over WTI does not reach Canadian heavy barrels directly, since they price off WTI less the Hardisty discount, as covered in our WCS report.

Baker Hughes and Alberta Data on Oct. 23; EIA Report on Oct. 28

Baker Hughes publishes its rig count on Oct. 23, and Alberta's weekly indicators report, also on Oct. 23, will update the WTI-WCS differential. The EIA's next weekly petroleum report on Oct. 28 will show whether U.S. crude exports rebound.