Heavy grades pumped in the Americas climbed to their highest levels in years on Wednesday, driven by the ongoing Operation Epic Fury launched by the US and Israel against Iran and the subsequent retaliation.
The retaliation resulted in curtailed shipments of comparable crude from the Middle East and has driven up international benchmark crude oil prices, Reuters reported.
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Brent crude has climbed to its highest point since January 2025.
The Middle East supply squeeze has pushed up prices for heavy crude from the US, Canada and Venezuela.
Iran has responded to Operation Epic Fury by threatening to target vessels passing through the Strait of Hormuz, a crucial shipping lane off its southern coast.
This development has effectively blocked the passage, halting approximately one-fifth of global oil supplies and causing numerous vessels to anchor outside the strait.
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By GlobalDataThe disruption has led to increased costs for refiners, which may be reflected in higher consumer prices for gasoline and diesel fuel.
Mars sour crude from the US Gulf of Mexico traded at a $5.50 premium over West Texas Intermediate (WTI) crude, the highest level since April 2020. This represents a $1.75 increase from the previous day.
Concerns are mounting among oil-producing nations. Iraq indicated that its daily output could drop by more than three million barrels if tanker movements in the Gulf are impeded.
This situation forces refiners in countries like India, South Korea and the US to seek alternative sources for Iraq’s Basrah oil.
With reduced Middle Eastern supply, buyers in countries like India and China may increasingly turn to Canada for their heavy crude needs.
The Trans Mountain pipeline, which transports heavy crude from Alberta to British Columbia for export, is currently operating below full capacity.
Venezuela is also reportedly offering heavy crude at elevated prices.
Furthermore, in the US, rising gasoline costs could present political challenges ahead of November’s mid-term elections.
Gasoline prices have surpassed $3 per gallon (gal) for the first time since November last year.
Diesel prices have also increased, with Tuesday’s closing price reaching $3.19/gal, the highest since October 2023, and peaking at $3.45.
Diesel inventories have sharply declined following high demand spurred by harsh winter conditions in the US, according to analysts and traders.
US WTI crude is trading at a significant discount of up to $8.75 per barrel (bbl) compared to Brent crude, reflecting expectations that US supplies will remain less affected by global events.
Meanwhile, US retail diesel prices rose above $4/gal for the first time in nearly two years and are expected to continue climbing as geopolitical tensions endure, reported Reuters.
Data from Cargo tracking company Vortexa indicates that around 900,000bbl of diesel and 350,000bbl of jet fuel are exported daily from the Gulf.
To address ongoing energy market disruptions, US President Donald Trump announced plans for risk insurance provision to shippers and potential naval deployments for vessel protection, if necessary.
As reported by Reuters, on Thursday by 07:22 GMT, Brent crude increased by $2.44, or 3%, reaching $83.84/bbl, marking its fifth consecutive session of gains.
Meanwhile, WTI crude climbed by $2.44, or 3.27%, to $77.10.
