WTI Surpasses Brent; West Asia Tensions Fuel Rally

Donald Trump's comments on the West Asia conflict fueled the rally after a brief cooling-off period. WTI, typically trading at a $2–$10 per barrel discount to Brent due to its landlocked nature and pipeline bottlenecks, had a $17 per barrel discount as recently as March 31.

The current premium of WTI over Brent is roughly $4 per barrel. The last time WTI traded above Brent in May 2022 was due to excess supply at Cushing, Oklahoma, from surging Permian Basin shale production outpacing pipeline capacity.

The U.S.–Israeli conflict involving Iran has disrupted key shipping corridors and created regional supply risks, pushing crude and fuel prices to multi-year highs. For India, which imports over 85% of its crude, higher prices increase the import bill, widen the current account deficit, and pressure foreign exchange reserves.

JPMorgan's Head of Asia Economic Research, Sajid Chinoy, stated that every $10 increase in crude prices causes an adverse terms-of-trade shock of about 0.4–0.5% of GDP for India. Chinoy added that even if the war ends soon, crude prices will remain elevated for months as supply disruptions unwind and countries rebuild strategic reserves.