The European and African oil markets are showing increased tightness, with crude differentials reaching record highs ahead of peak summer demand, as Asian buyers aggressively secure barrels to offset shortages from Iran’s Strait of Hormuz blockade now in its fifth week.
Global Supply Squeeze
Iran’s war has shuttered at least 10 million barrels per day (10% of global consumption) from Middle East production via strait closure and infrastructure attacks. This forces redirection of West African (Angola, Nigeria) and North Sea cargoes eastward, with March shipments to Asia rising 200,000 bpd to 3.72 million bpd.
Price Premiums Soar
U.S. WTI Midland traded at a record $9.50/bbl premium over dated Brent for Europe—nearly $8 above pre-war levels—reflecting fierce competition. European gasoline reroutes to Asia amid surging regional prices, depleting regional balancing pools.
Analyst Outlook
Morgan Stanley notes global barrel scarcity drives bidding wars, while veteran IEA analyst Neil Atkinson warns fewer available supplies inflate costs universally. EU ministers coordinate on storage and security as refiners scramble.
