US crude surged 11% to rare premium over Brent as US signals prolonged military campaign

Global crude futures surged on Thursday, erasing prior losses as the US confirmed an extended military campaign against Iran, dashing hopes of a near-term ceasefire.

Immediate physical tightness propelled US WTI sharply higher, jumping $11.42, or 11.4%, to settle at $111.54/barrel — its largest absolute daily gain since 2020. Brent rose $7.87, or 7.8%, to $109.03.

Front-month WTI now trades at a rare $3 premium to June Brent, marking a year-high spread and highlighting extreme backwardation. Traders scrambled for prompt barrels after Washington signaled intensified operations, effectively blocking the Strait of Hormuz. The IEA warned that Europe could begin feeling structural supply shortages by April as contracted cargoes are exhausted.

Tightness is compounded by Eastern European deficits, with Ukrainian strikes cutting roughly 1 million bpd of Russian exports. OPEC+ ministers meet Sunday to consider output adjustments, but any spare barrels cannot clear the maritime chokepoint.

Analysts caution that if the Strait remains closed into mid-May, cumulative supply shortfalls could drive global benchmarks toward $150/barrel.

Written by: Aiman Haikal