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Brent and WTI are the two names most commonly associated with oil prices. They are usually grouped together, but in reality, they behave differently. Some days the gap between them is small, and other days it widens so much that it becomes a story on its own.
These differences tell us a lot about what is happening in the global energy market. They reflect how oil moves, how it is stored, how refineries use it, and how political events shape supply. Even though both are types of crude oil, they live in different environments, and that affects their price.
Let’s take a closer look at why Brent and WTI separate, what influences each one, and why the spread between them matters.
Even before looking at market forces, it helps to understand what these two oils actually are.
• Comes from the North Sea
• Used as the benchmark for Europe, Africa, and large parts of Asia
• Slightly heavier and contains more sulfur
• Comes mainly from Texas, Oklahoma, and North Dakota
• Lighter and sweeter, which makes it easier to refine
• Used mostly for North American pricing
Both are high quality oils. However, small differences in quality and location set the stage for different pricing behavior.
If there is one factor that consistently drives the spread between Brent and WTI, it is transportation.
WTI is priced at Cushing, Oklahoma. Cushing is a huge storage hub, but it is not connected directly to the ocean. Everything has to move through pipelines. If storage tanks fill up or pipelines reach capacity, WTI can lose value quickly because the oil simply has nowhere else to go.
This problem became obvious in April 2020 when WTI fell below zero for the first time. There was too much oil, too little space, and no easy way to ship it out.
Brent is produced offshore and can be shipped around the world. This makes it naturally more flexible. When demand increases somewhere in Asia or Europe, Brent can reach those places quickly.
This difference alone often explains why Brent trades at a premium. When oil can move freely, it holds its value better.
Another key point is that Brent reflects global conditions, while WTI reacts to what is happening inside the United States.
It moves when there are:
• Conflicts in the Middle East
• OPEC or OPEC Plus announcements
• Supply disruptions in countries like Libya or Nigeria
• Shipping route risks
• Strong demand from Europe or Asia
Brent is connected to everything happening in the wider world.
It responds to:
• Shale production levels
• The amount of crude stored in Cushing
• US refinery demand
• Pipeline bottlenecks
• Seasonal driving patterns
WTI can fall even when the global market is tight. This happened several times during strong US shale growth. The rest of the world needed oil, but the US produced more than its infrastructure could handle.
US shale production is one of the biggest reasons why the Brent-WTI spread changed over the last decade. Shale oil is usually light and sweet, very similar to WTI. As shale production increased, so did the supply of this type of crude.
But refineries cannot instantly increase how much light oil they process. When supply grows faster than refining capacity, the extra barrels end up in storage. This pushes WTI prices down relative to Brent.
Meanwhile, Brent production in the North Sea has been declining gradually, which supports its price. These two trends together create sustained price differences.
Brent carries something that WTI does not: a geopolitical risk premium.
Since Brent serves as a global benchmark, anything that threatens oil supply anywhere in the world tends to raise Brent prices. You can trade oil on news if you watch the world closely; which can turn into your favor.
This includes:
• Tensions involving Iran
• Conflicts in the Middle East
• Sanctions on oil exporters
• Risks in the Red Sea or Strait of Hormuz
• Political issues in major African producers
WTI, on the other hand, is mostly shielded from these events because its supply is domestic. It may rise a little during global tensions, but usually not as much as Brent.
Refineries behave differently depending on the type of crude they prefer.
Because it is very light and sweet, WTI is ideal for gasoline production. This means:
• US refineries often increase WTI demand during the summer
• Seasonal gasoline demand can give WTI a temporary boost
Brent works well for middle distillates such as diesel and jet fuel. Europe relies heavily on these fuels, which means Brent demand can rise during winter months or during periods of strong industrial activity.
These seasonal patterns can temporarily push one benchmark above the other.
OPEC decisions generally affect Brent more strongly than WTI because OPEC production shapes global supply. When OPEC cuts output, Brent usually rises faster because the global market tightens.
WTI also reacts to OPEC decisions, but the effect can be softer if the United States continues to produce large volumes of shale oil. There have been times when OPEC cuts lifted Brent, while US tanks remained full and kept WTI lower.
Since oil is priced in US dollars, the dollar’s strength matters. When the dollar rises, oil becomes more expensive for the rest of the world. Brent, which reflects global conditions, usually reacts more strongly to these currency effects.
WTI has a more localized demand base inside the United States, so it can sometimes resist dollar driven weakness slightly better.
This is not always the case, but it adds another layer to the Brent-WTI relationship.
Whenever new pipelines or export terminals open in the United States, WTI gains value because it becomes easier to move abroad. A good example is when new pipelines connecting the Permian Basin to the Gulf Coast reduced the WTI discount a few years ago.
When transportation improves:
• WTI becomes more competitive
• US exports increase
• The Brent premium often shrinks
This shows that infrastructure is a major force shaping the spread.
The difference between the two prices can act like a small window into the energy market. A widening spread might signal:
• Rising global risks
• Heavy US oversupply
• Storage shortages in Cushing
• Limited pipeline capacity
A narrowing spread might signal:
• Strong US exports
• Balanced shale production
• Calmer global conditions
Traders watch this spread daily because it can reveal shifts in both regional and international dynamics.
Brent and WTI may both be crude oils, but they live in different worlds. Brent serves as the global benchmark and reacts to international risks. WTI reflects the behavior of the US market, its infrastructure, and its production patterns.
Their price differences come from quality, transportation, storage, refinery needs, OPEC actions, and geopolitical events. Understanding these factors helps traders make sense of market moves and gives them a better view of the global energy landscape.
The Brent-WTI spread will likely continue to move in cycles, shaped by changes in production, infrastructure, and global demand. Following these shifts not only helps traders but also provides a clearer picture of how the world’s oil flows are changing.
Why does WTI sometimes trade at a big discount to Brent?
WTI can fall behind Brent when storage tanks in Cushing fill up or when pipelines cannot move enough oil to the coast. Since Brent is easily shipped worldwide, it usually holds its value better during periods of oversupply in the United States.
Is Brent always more expensive than WTI?
Not always. While Brent often trades at a premium, there have been times when WTI traded higher, especially when US refinery demand was strong or when infrastructure upgrades made American crude easier to export.
Why do traders watch the Brent-WTI spread?
The spread gives a quick picture of what is happening in both global and US oil markets. A wide spread may signal global tension or strong international demand, while a narrow spread can point to balanced supply or improved US transport capacity.
Does the quality of the crude oil itself affect the price gap?
Yes. WTI is lighter and sweeter, which makes it easier to refine into gasoline. Brent is slightly heavier, so refineries that prefer light crude may favor WTI. This difference can influence prices during certain seasons.
How do geopolitical events influence Brent more than WTI?
Brent reflects global supply because it is part of the international seaborne market. Events in the Middle East, Africa, or major shipping routes can raise Brent prices quickly. WTI, being mostly domestic, is less exposed to these risks.
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