WTI and Brent crude fall nearly 10% on a US-Iran ceasefire, though refined product markets remain tight amid persistent downstream constraints.
West Texas Intermediate and Brent crude prices have dropped sharply this week, erasing most gains since late February when the Strait of Hormuz disruption sent benchmarks higher. WTI fell toward the mid-$70s, while Brent slipped below $80, driven by an interim US-Iran ceasefire and resumed tanker traffic through the critical waterway. Futures markets have priced in a supply rebound, though the physical market tells a different story.
The selloff contrasts with persistent tightness in refined products, where diesel, jet fuel, and petrochemical feedstocks face multi-year high margins. Regional jet fuel spreads spiked to levels typically seen only during acute supply shortages. Refining capacity constraints remain unresolved, meaning even lower crude prices may not ease downstream pressures. The ceasefire’s fragility—with talks delayed until next week—adds further uncertainty to the outlook.
Analysts note the market’s focus on near-term supply risks overlooks a looming glut later in the year. However, the current disconnect between futures and physical markets suggests the correction may be premature, particularly as refined product inventories remain strained.