WTI Retreats from Weekly Highs as Bakken Differential Narrows

Front-month WTI crude oil traded at $104.22 on Friday morning, down $0.81 for the session, according to live price data. The retreat follows a significant rally earlier in the week driven by supply fears. The international benchmark Brent crude rose slightly to $110.91. Bakken crude traded at a differential of $-3.42 per barrel versus WTI.

The week saw a dramatic surge, with June WTI futures trading as high as $105.88 on Thursday, up $11.48 or 12.16% from the prior week's low, according to OilPrice.com. The primary catalyst was escalating geopolitical risk centered on Iran and the Strait of Hormuz, a critical global oil transit route. Traders reacted to failed peace talks and the potential for prolonged supply disruptions.

Adding to market tightness, the United Arab Emirates (UAE) announced its decision to leave the OPEC+ alliance, a move reported as a new supply shock by OilPrice.com. Meanwhile, OPEC+ delegates signaled that the group is likely to agree on another symbolic production increase for June, according to Rigzone. This suggests the alliance is not planning a substantial output response to the recent price spike.

Downstream, the high crude environment is impacting consumers. California gasoline prices surged above $6 per gallon this week, Rigzone reported.

For Bakken operators, the elevated price environment above $100 per barrel provides strong cash flow and drilling incentive. The narrowed Bakken differential, currently under $-4.00, means a higher realized price for local crude compared to periods of wider spreads. However, the market volatility driven by geopolitical events remains a key risk, as prices can retreat rapidly on shifting headlines. The expected symbolic hike from OPEC+ is unlikely to alter the fundamental supply picture significantly in the near term.