Global oil markets have been roiled by a surprising divergence between the world’s major benchmarks, Brent crude and its U.S. counterpart, which in recent days have traded at odds with one another, wrongfooting investors betting on the exact opposite.
Traders worldwide have been struggling to make sense of where oil prices are headed, juggling countervailing signals from major producers Saudi Arabia and Russia on the path for future OPEC supply, against renewed U.S. sanctions on Iran and Venezuela’s ongoing economic crisis.
The market expected OPEC, led by Saudi Arabia, to add to global supplies as sanctions reduce Iranian exports in coming months. But instead of bringing Brent closer in line with U.S. crude, the opposite has happened, roiling both futures trading and key physical grades.
On Thursday, U.S. crude futures traded as much as $11 below Brent , the deepest discount since early 2015. Traders say the tide of light sweet crude from the United States is threatening to swamp the global market.
Reference: Reuters
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