WTI Dips Below $90 Amid Hormuz Volatility, Bakken Discount Widens

Front-month West Texas Intermediate crude futures traded at $89.51 per barrel Wednesday morning, down $0.71 (-0.79%), while Brent crude traded at $94.17, down $0.48 (-0.51%), according to live price data. The moves represent a retreat from earlier highs, with Brent having topped $96 per barrel earlier in the session. Natural gas prices saw a modest gain, up $0.03 to $2.93 per MMBtu.

The price volatility is directly linked to escalating tensions in the Strait of Hormuz, a critical global oil chokepoint. According to a report from OilPrice.com, tanker traffic through the strait slumped on Tuesday. Data from Kpler showed only four tanker crossings, well below a ten-day average of 13. Ship-tracking firm Windward reported similarly constrained activity.

This follows reports of Iran striking two tankers in the strait over the weekend in response to U.S. military actions, which initially propelled prices higher. U.S. Energy Secretary Chris Wright stated that 17 million barrels of crude passed through the strait on Monday alone, a figure that analysts suggest indicates flows may be above pre-war levels when factoring in bypass routes. However, commodity analysts at ING cautioned that single-day figures are volatile and that ship-trackers are estimating "much more modest flows."

The geopolitical rhetoric remains heated. Former President Donald Trump was quoted by Reuters as saying, "I like our position now much better, with almost total control of the Hormuz Strait." Iran's joint military command warned that continued U.S. actions would be met with "heavier, more widespread, and devastating responses."

For Bakken operators, the headline benchmark price retreat is coupled with a widening local discount. The Bakken differential to WTI widened to -$3.42 per barrel on Wednesday. This means Bakken crude priced at Clearbrook, Minnesota, is effectively trading near $86.09. The expanding discount can pressure netbacks for North Dakota producers even as global geopolitical risk premiums fluctuate.

The price action demonstrates the market's sensitivity to real-time supply disruptions in the Middle East, even as analysts attempt to parse conflicting data on actual flow volumes. The situation underscores the fragile balance supporting current prices, where any significant and sustained interruption to Hormuz shipments could trigger another sharp price spike. For now, the market appears to be digesting the initial shock and assessing the durability of the shipping slowdown.