USGC Refiners Gain as Brent-WTI Spread Hits 6-Yr High


   USGC Refiners Gain as Brent-WTI Spread Hits 6-Yr High

   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- As the Brent-WTI spread surged into double digits this 
week, U.S. refiners face mixed fortunes amid high volatility and the 
uncertainty generated by the escalation of the Iran War.  Refiners operating 
along the Gulf Coast could benefit from cheaper domestic crude and higher 
prices for their finished product, while West Coast peers remain exposed to 
costlier imported barrels and refinery closures.

   The Brent-WTI spread hit a nearly six-year high this week as pricing of 
Brent, the global crude benchmark, surged on tightening global oil supplies 
driven by the longer-than- expected conflict in the Middle East. U.S. crude 
inventories, meanwhile, approached two-year highs last week, putting downward 
pressure on WTI.

   As of 2:25 p.m. Friday (3/20), the spread was trading between $13 bbl and 
$14 bbl, versus the $4.75 bbl to $5.00 bbl range during the week ended March 
13, representing more than double the prior week's level.

   Year-on-year basis, the spread was even more pronounced. During the same 
week in March 2025, the Brent-WTI spread averaged approximately $4.51 bbl. 
Current levels represent three times the increase observed a year earlier.

   This week, the spread was at its widest since April 2020, when a short 
squeeze drove WTI to around minus $40 bbl while Brent remained at nearly plus 
$25 bbl, resulting in a difference of nearly $65.

   At its current level, the spread might work best for U.S. refiners on the 
Gulf Coast, physically connected to the Permian and Cushing.  The Gulf Coast 
sits at the terminus of the major North American pipeline networks, such as the 
Seaway, Keystone, and Permian-to-Gulf lines, allowing these refiners to access 
inland crude, or WTI, with minimal transport friction.

   Also, Gulf Coast refiners benefit by purchasing domestic WTI at sharp 
discounts to Brent and selling, at higher prices, gasoline, processed diesel 
and other distillate products to the domestic and export markets.

   Moving a barrel via these pipelines costs roughly $1 bbl to $3 bbl, whereas 
U.S. West Coast refiners must pay significantly more for rail or waterborne 
shipments.

   Refiners on the U.S. West Coast remain most vulnerable, lacking pipeline 
connectivity to the shale-rich interior and still relying heavily on 
Brent-linked imports.

   The idling of major California refineries will also slash regional capacity 
by 20%, forcing reliance on costlier waterborne barrels from Asia. The 
139,000-bpd Phillips 66 Wilmington refinery in Los Angeles wound down 
operations late last year while the Valero Benicia refinery is slated to close 
by April.

   Their problem could be alleviated partially by the U.S. Treasury's two-month 
long suspension of the Jones Act this week to allow international tankers in 
joining U.S. vessels to transport oil.

   Meanwhile, energy prices have surged broadly in the three weeks since the 
February 27 start of the U.S.-Israel-Iran war.  Despite the situation in the 
Middle East, WTI futures prices are expected to remain below Brent as U.S. 
crude production is relatively insulated from the Iran conflict. This also is 
expected to support continued builds in U.S. crude stocks, as they have in the 
past four weeks.

   Last week, crude oil stocks reached a near two-year high of 449.3 million 
bbl, according to Energy Information Administration data. Pipelines from the 
Permian Basin to the Gulf Coast are currently running at 94%--95% capacity, 
squeezing exporters from shipping out more.

    




(c) Copyright 2026 DTN, LLC. All rights reserved.