US Cash Crude-Mars hits 5-year high as Iran war disrupts global supplies
HOUSTON, March 3 (Reuters) - Flagship U.S. offshore crude Mars Sour traded at its highest since May 2020 on Tuesday, dealers said, as war in Iran threatened global supplies of heavy, sour grades.
Mars Sour jumped 75 cents to a midpoint of a $3.75 premium to U.S. crude futures on Tuesday.
Traders said heavy, sour grades will likely continue to rally owing to disruption of supplies in the Middle East through a key shipping lane.
On a typical day, ships carrying crude oil equal to about one-fifth of global demand sail through the Strait of Hormuz along with tankers hauling diesel, gasoline and other fuels to major Asian markets, including China and India. The waterway is also the conduit for about 20% of the world’s liquefied natural gas.
Other offshore grades also made gains as the spread between U.S. crude futures and Brent widened to a discount of as much as minus $8.58 a barrel, its widest since November 2022.
A discount larger than $4 a barrel typically drives higher demand for barrels across the Atlantic, as traders spot an arbitrage window, though high freight rates may curb exports, traders said.
Light Louisiana Sweet for April delivery was steady at a midpoint of a $4.25 premium and was seen bid and offered between a $4.15 and $4.35 a barrel premium to U.S. crude futures CLc1
Mars Sour rose 75 cents to a midpoint of a $3.75 premium and was seen bid and offered between a $3.65 and $3.85 a barrel premium to U.S. crude futures CLc1
WTI Midland rose 20 cents to a midpoint of a 75-cent premium and was seen bid and offered between a 65-cent and 85-cent a barrel premium to U.S. crude futures CLc1
West Texas Sour rose $2.25 to a midpoint of a 20-cent premium and was seen bid and offered between a 15-cent and 25-cent a barrel premium to U.S. crude futures CLc1
WTI at East Houston, also known as MEH, traded between a $1.50 and $1.70 a barrel premium to U.S. crude futures CLc1
ICE Brent May futures LCOc1 rose $3.66 to settle at $81.40 a barrel
WTI April crude CLc1 futures rose $3.33 to settle at $74.56 a barrel
The Brent/WTI spread widened $1.04 to last trade at minus $8.06, after hitting a high of minus $7.32 and a low of minus $8.58.
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