Concern over instability in the Middle East — notably in Syria and Egypt — has helped drive up the price of crude oil. Brent crude, the main international measure, is trading at about $105/barrel. U.S. crude oil uses a different measure, West Texas Intermediate, which enjoyed a deep discount against Brent — until recently.
“And what’s happened now is that deep discount appears to be gone.”
Michelle Foss heads the Houston-based Center for Energy Economics of the University of Texas. She says transportation bottlenecks within the U.S. have caused local gluts, holding down domestic prices.
“We’ve had a long period, almost two years, in which producers in North Dakota and west Texas were getting substantially below $90 for their crude.”
Foss says now that those bottlenecks are cleared, more oil is making it to East and Gulf Coast ports, where it can command international prices. That’s driving up the cost to refiners.