WTI Tops $90 as Geopolitical Tensions, Refining Crunch Lift Prices

Oil prices extended gains Wednesday afternoon, with West Texas Intermediate (WTI) crude closing in on $91 a barrel amid heightened Middle East tensions and a severe global shortage of refining capacity. WTI settled at $90.67, up 0.5%, while the international benchmark Brent crude rose 0.62% to $95.24, according to live price data. The price for Bakken crude at Clearbrook, Minnesota, held at a discount of $3.42 per barrel below WTI.

The price strength is being driven by a confluence of factors squeezing fuel markets. According to OilPrice.com, the U.S.-Iran conflict has deepened this week with tit-for-tat attacks, disrupting the normalization of traffic through the critical Strait of Hormuz. Simultaneously, Ukrainian attacks on Russian refineries are constraining exports from a major global fuel supplier.

These geopolitical shocks are exacerbating an already tight global refining complex. Goldman Sachs commodity expert Daan Struyven warned that global refinery runs are down 7 million barrels per day from last year and have averaged nearly 6 million barrels per day below seasonal norms since March, OilPrice.com reported. This has led to a dramatic surge in diesel and heating oil prices.

The nationwide average retail price for diesel reached $5.69 per gallon, just below its April peak, according to AAA data cited by OilPrice.com. On the futures market, Bloomberg's NYMEX one-month heating-oil/crude spread breached $100 per barrel early Tuesday before surging to $108.

In response to the rising fuel costs, President Donald Trump pressed U.S. oil refiners to boost domestic production of gasoline and diesel during a closed-door meeting Tuesday, Rigzone reported. The meeting was called as diesel creeps toward $6 per gallon nationally and gasoline rises above $4 ahead of November's midterm elections, according to OilPrice.com.

For Bakken operators, the high crude prices provide a strong revenue floor, but the widening diesel crack spread presents a mixed picture. While production economics are favorable, soaring diesel costs directly impact drilling and completion expenses, as well as local transportation and logistics. The stable Bakken differential suggests regional takeaway capacity remains sufficient, but high fuel costs could pressure midstream and refining margins downstream.

Analysts note that relief from the refining crunch is unlikely in the short term. Kelly Chen, a senior economist at DNB Carnegie, wrote that while China has enough spare refining capacity to provide meaningful relief, Beijing appears to have little economic or strategic incentive to rescue Western fuel markets, OilPrice.com reported.