On October 9, a midday review noted that Brent crude is extremely sensitive to Middle East geopolitical issues, while US crude WTI is sensitive to domestic US crude inventory levels. Although both serve as international crude oil price benchmarks, a price gap has always existed between them.
Normally, Brent crude is quoted about $3 to $5 higher than US crude WTI, because Brent's oil quality is naturally superior to that of WTI. However, when supply and demand conditions undergo profound changes, the spread between the two can invert or widen significantly.
As of today's Asian session, WTI is quoted at $90.41 and Brent crude at $102.87, a spread of $12.46 — nearly $13 — far above the normal upper limit of $5. On September 15, WTI touched a阶段性 high of $105.83 and Brent crude also hit a阶段性 high of $108.75, with a spread of just $2.92, showing no widening at that time.
The decline in international oil prices since late September is the direct cause of this abnormal spread. From the chart, it is clear that in the latest downward trend, Brent crude's decline has been relatively limited, while WTI's drop has been excessive. Compared with their peaks, WTI has fallen $22.68 and Brent crude has fallen $13.71.
The decline in international oil prices is partly related to the easing of Middle East tensions, but since the US and Iran have not yet reached a stable peace agreement, this downturn may not last very long. The US will hold midterm elections on November 5, and Trump has stated that he does not want to launch a new round of strikes against Iran before then, which has caused market risk sentiment to cool somewhat.
According to third-party statistics, the number of ships passing through the Strait of Hormuz per day remains below 26, far from the normal level of over one hundred. Although there are rumors that oil-exporting countries are using small vessels to transport oil out of the Strait of Hormuz, this is unlikely to fill the massive supply-demand gap in the international crude oil market.
The view here tends to be that the easing of US-Iran tensions is temporary. After the US midterm elections on November 5, the two sides may enter a new round of confrontation, at which point both WTI and Brent crude could strengthen together. The current spread of more than ten dollars between Brent crude and WTI is difficult to sustain over the long term. In other words, in a new upward wave, WTI's gain could exceed that of Brent crude.
Risk warning, disclaimer, and special statement: Markets carry risk, and investment requires caution. The above content represents only the analyst's personal views and does not constitute any operational advice. Please do not treat this report as the sole reference. At different times, the analyst's views may change, and updated content will not be announced separately.