Oil Prices Surge Over $4 as Global Supply Concerns Intensify

Front-month WTI crude oil surged 4.19% on Tuesday, September 15, to settle at $105.64 per barrel, a gain of $4.25. Brent crude rose 2.73% to $108.56. The Bakken differential was quoted at -$3.42 versus WTI.

The sharp price increase reflects ongoing global supply anxieties, underscored by a major deal for deeply discounted Iraqi crude. According to a report from OilPrice.com, the UAE's ADNOC has been purchasing tens of millions of barrels of Iraqi crude at extraordinary discounts. The company agreed to buy 32 million barrels for August at discounts of $24.90 to $27 per barrel and another 40 million barrels for September.

These steep discounts are a direct result of Iraq's struggle to export its oil. Iraq exported just 1.374 million barrels per day (bpd) in July before recovering to 2.354 million bpd in August, according to data from Kpler cited in the report. September exports are running around 2 million bpd. The constraints are largely due to limited shipping capacity and historical reliance on routes through the Persian Gulf and the Strait of Hormuz.

ADNOC, with superior logistics including a pipeline to the port of Fujairah outside the Strait, is capitalizing on the situation. The report states ADNOC plans to process much of the discounted Iraqi crude at its Ruwais refinery, freeing more of its own premium UAE crude for export. UAE crude exports have risen from 2.871 million bpd in July to 3.236 million bpd so far in September.

Other major traders and companies, including PetroChina, TotalEnergies, Vitol, and Trafigura, have also purchased the discounted Iraqi barrels. Despite Iraq's ambition to raise production to between 8 million and 10 million bpd within six years, current export bottlenecks are creating a two-tier market and highlighting persistent volatility in global crude flows.

For Bakken operators, the strong rise in the WTI benchmark price is a positive signal, though the regional differential remains a key factor for realized prices. The ongoing dislocation in Middle Eastern supplies reinforces the value of stable, secure production from basins like the Bakken in North America. However, the deep discounts on physically constrained crude also serve as a reminder of how logistics and geopolitics can drastically alter the value of a barrel.

Natural gas prices also saw a modest increase, rising $0.04 to $2.94 per MMBtu on Tuesday.