Bakken Crude Commands $7 Premium as Iran War Sparks Market Volatility

North Dakota crude oil shipped on the Dakota Access Pipeline is fetching nearly $7 more per barrel than a key U.S. benchmark price amid market chaos caused by the war with Iran, state regulators reported this week. The premium for light, sweet Bakken crude at its destination in Illinois is a reversal of the typical discount applied for transportation costs, according to officials from the North Dakota Department of Mineral Resources (DMR) and the North Dakota Pipeline Authority.

Justin Kringstad, director of the Pipeline Authority, stated that the price uplift is shared by "royalty owners, the producers, the state." However, regulators said the exact reason for the premium and how much value is returning to North Dakota remains unclear. One possibility cited is that Bakken crude can be more easily refined into high-demand products like jet fuel and diesel in markets such as Europe.

The volatile pricing is a direct result of the Iran war and the closure of the Strait of Hormuz, a critical maritime chokepoint for global oil shipments. DMR Director Nathan Anderson described the last 50 days with the word "volatility," noting a nearly $20 price swing in just the past week depending on geopolitical talks.

Despite high prices, a significant drilling increase is not expected this year. Anderson said publicly-traded oil companies have finalized 2026 budgets and promised investors specific capital spending levels, limiting their ability to react to current market conditions. He does not expect these companies to increase drilling activity until 2027. Privately-owned operators have more flexibility and could add drilling if prices justify it.

Current activity reflects this cautious stance. The number of active drilling rigs in the state stands at 26, with companies indicating plans to add only one or two more. In contrast, the number of rigs performing maintenance work on existing wells has risen from 110 to 125 since last month, indicating a focus on optimizing current production.

The full impact of the war on state production and revenues remains unknown, as official state oil and gas data lags by two months. The most recent data from February shows production at 1.129 million barrels per day, slightly below the state's budget forecast of 1.15 million barrels per day. The February price of $57.54 per barrel was also below the budgeted $59.

Looking ahead, Kringstad referenced a U.S. Energy Information Administration prediction for oil prices to drop below $80 per barrel once global dynamics stabilize, though that dip may not occur until 2027. State officials expect to have more detailed information on the Bakken price premium and its local impact when they present next month's data.