Why the WTI Vs. Brent Crude Spread Is Shrinking

When the U.S. was threatening a strike, Brent prices jumped as this would undoubtedly interrupt the flow from one of the most important oil-producing regions of the world. As the tensions have cooled, so too has Brent’s price. Should a diplomatic solution be found in regards to Syria, Brent would likely sink back down and narrow the spread even further.

But be careful, any kind of military strike in that region would send Brent higher. Even if a strike would not impact refineries or pipelines, the mere news of an impending military conflict will cause this commodity to immediately trade higher. The EIA expects the spread between the two to rise a bit and close the year out around $6, but that all hinges on what happens in Middle East. Anyone trading these commodities would do well to keep their ear to the ground and finger on the trigger for any major news out of the East.

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Disclosure: No positions at time of writing.

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