Countries worldwide are rushing to buy crude oil, with the US crude oil premium reaching a historic high.

Asian and European refiners are fighting fiercely for alternative Middle East crude oil supply, pushing the U.S. West Texas Intermediate (WTI) spot premium to its highest level in history.

According to media reports on Tuesday, the Strait of Hormuz is effectively closed, severely disrupting the flow of Middle East crude oil. Against this backdrop, the spot premium for WTI oil for July delivery has jumped to the range of $30 to $40 per barrel, far higher than the roughly $20 premium at the end of March.

In a report dated April 3, Rystad Energy’s chief oil analyst Paola Rodriguez-Masiu said, “Asian refiners shut out by Middle East supply are launching aggressive bids for every barrel of crude oil available in the Atlantic basin.”

The sharp surge in the premium is significantly raising costs for refiners in Asia and Europe, keeping their losses widening; the pressure is especially severe for some U.S. state-owned enterprises because they must shoulder fuel-supply security obligations required by the government. One trader said, “Every day there is a new price,” and another noted that it may be more economical for refiners to process less crude and instead buy finished products—provided there is still someone willing to sell in the market.

Premium hits a record high, with WTI briefly overtaking Brent

According to media reports citing multiple traders, the July-delivery WTI crude quotations to North Asia, versus the Dubai benchmark, are a premium of about $34 per barrel, versus an about $30 per barrel premium to spot Brent; meanwhile, the ICE Brent benchmark quotation for August delivery has already approached $40 per barrel.

This premium level has driven WTI crude futures prices to unusually trade above Brent futures over last weekend. Usually, Brent crude—used as the pricing benchmark for seaborne crude—tends to lead in global supply shocks, while WTI has long traded at a discount.

It is worth noting that part of this spread inversion is due to technical factors—WTI’s near-month contract corresponds to May delivery, while Brent has rolled to the June contract, causing distortion in the apparent spread. But the deeper driver lies in the spot market’s extreme tightness: WTI’s near-to-far month spread has risen to the highest level in history, reflecting the market’s urgent need for safe crude oil barrels available for immediate delivery.

Middle East supply constrained, Atlantic-basin crude becomes the focus of the scramble

The effective closure of the Strait of Hormuz prevents large volumes of Middle East crude from being exported normally, and Gulf oil producers correspondingly cut upstream output, further tightening global supply. Europe is typically the largest importer of U.S. crude, but strong demand from Asian buyers has broken the existing supply-and-demand balance.

Asian refiners are currently expanding their procurement coverage to the Americas, Africa, and even Europe to seek alternative supply. Companies such as Japan’s refiner Taiyo Oil have completed WTI crude purchases at a premium of about $20 per barrel from late March to early April; since then, the further jump in the premium means that subsequent procurement costs will be significantly higher.

As uncertainty in global shipping routes continues to rise, WTI crude has effectively gained a “safety premium.” Its traditional discount versus Brent has not only narrowed sharply but even reversed. Analysts note that the current price inversion indicates that the normal pricing signals tied to physical logistics have structurally failed.

Refiners under pressure, with state-owned enterprises hit first

A record crude premium is eroding refining margins across the board. According to media reports, losses at refiners in Asia and Europe are both continuing to widen, and some companies are already facing severe operating pressure.

The situation for state-owned refining firms is particularly difficult—on the one hand, they must fulfill the government-mandated fuel supply security obligations; on the other, they must absorb sharply higher crude procurement costs. A trader suggested that, at today’s premium levels, it is economically more reasonable to process less crude and instead purchase finished products, but supply in the finished products market is also tightening.

WTI futures’ near-month contract backwardation has risen to record extreme levels, further confirming the market’s intense demand for crude oil available for immediate delivery. For investors, this signal means that the spot market’s supply tightness is unlikely to ease quickly in the near term, and price volatility risk will remain elevated.

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