Prices for heavy crude oil produced in the Americas surged to multi-year highs on Wednesday as attacks by the US and Israel on Iran slowed exports from Middle Eastern oil producers. Heavy crude prices in Europe and Africa also saw increases. Brent crude reached its highest level since January 2025. In retaliation, Iran has threatened to attack any vessels using the shipping lanes near the Strait of Hormuz off its southern coast. This has effectively severed traffic through the Strait of Hormuz, blocking approximately one-fifth of global oil supplies and leaving hundreds of tankers anchored nearby. Due to the reduced supply from the Middle East, prices have risen for heavy crude oil produced in Venezuela, Canada, and the United States. Broker reports indicated that Mars Sour crude, a flagship grade from the US Gulf of Mexico favored by global refiners, traded at a premium of $5.50 per barrel over the benchmark West Texas Intermediate on Wednesday. This represents the highest price since April 2020 and is an increase of $1.75 from Tuesday. Rohit Rathod, a senior analyst at ship-tracking firm Vortexa, stated that buyers are scrambling to purchase these crudes on expectations that the Middle East conflict will persist for an extended period. Even refineries not directly affected are seeing their margins eroded. US refineries are designed to process heavier crude and will utilize it to boost diesel production in response to the price increases. Traders reported that some heavy crude prices from Europe and Africa have also risen. One trader noted that Gabon's Mandji crude is now offered at a premium of $1 per barrel over the spot benchmark Brent, a significant shift from the substantial discount seen before the conflict. Another trader reported that bids for Europe's Johan Sverdrup crude reached a premium of 90 cents per barrel to spot Brent, a sharp increase from the discount of 3.25 cents per barrel at which it last traded on February 26.

Oil Supply Tightens According to two Iraqi officials, Iraq, OPEC's second-largest producer, stated on Tuesday that it could be forced to cut output by more than 3 million barrels per day within days if tankers are unable to freely reach loading points in the Gulf region. The price for US offshore Heavy Louisiana Sweet crude was $5.25 higher on Tuesday compared to 2020 levels. Its closing price was also $1 higher than Light Louisiana Sweet crude, indicating increased demand for heavy crude, which typically trades at a discount to lighter grades. Analysts stated that the price differential between Canadian heavy crude and West Texas Intermediate has tightened by $1.25 per barrel since last week. Buyers from India and China, feeling the pressure from the Middle East supply shortfall, may turn to Canada, one of the largest producers of heavy crude. The Trans Mountain pipeline, which transports heavy crude from Alberta's oil sands to the coast of British Columbia for export, is not yet operating at full capacity. Patrick O'Rourke of ATB Cormark Capital Markets said, "If the Iran situation persists, we could see the remaining spot capacity on the Trans Mountain pipeline heavily utilized within weeks or a month." A source confirmed that Venezuelan heavy crude is being sold at higher prices.

Fuel Prices Increase In the United States, where gasoline prices are a key political issue, motor fuel prices have risen above $3 per gallon for the first time since last November. This poses a significant risk for President Donald Trump and Republicans facing midterm elections in November. Diesel prices hit a record high on Wednesday, reaching $3.45 per gallon. The Middle East is a major source of diesel, so conflict in the region has a direct impact on its price. Analysts and traders reported that inventories have declined sharply following a period of strong demand due to a severe winter in the US. Neil Crosby, an analyst at Spartan Commodities, suggested that prices for light, low-sulfur crude will soon begin to rise due to the supply shortages. Two traders reported that premiums for certain grades are already increasing, including Brazilian light crude exported to China. Offers are scarce, with the premium to ICE Brent jumping to $13 or $14 per barrel, compared to a pre-conflict premium of $2 to $3. On Wednesday, US West Texas Intermediate crude traded at a discount of up to $8.75 per barrel to globally traded Brent crude, the widest discount in over three years. This reflects expectations that US supply will be less affected by global events. Idemitsu Kosan, Japan's second-largest refiner, purchased 2 million barrels of West Texas Intermediate crude from South Korea's SK Energy on Monday for delivery in June.