What is the WTI-Brent spread?

The WTI-Brent spread is the price difference between West Texas Intermediate (WTI) crude oil, the US benchmark, and Brent crude oil, the international benchmark. Historically, WTI traded at a slight premium to Brent because it is a lighter, sweeter (lower sulfur) grade that is cheaper to refine into gasoline. However, the relationship has been volatile and the spread has at times exceeded $25 per barrel, reflecting shifts in regional supply, infrastructure constraints, and global trade flows.

The shale revolution fundamentally altered the WTI-Brent relationship. Beginning around 2011, surging US shale production created a glut of light sweet crude in the US Midwest while Brent continued to reflect tighter global supply conditions. Since US crude oil exports were banned until December 2015, the surplus had no outlet, and WTI traded at a persistent discount to Brent, reaching $25 per barrel in September 2011. The lifting of the export ban gradually normalized the spread as US crude flowed into global markets.

Infrastructure plays a key role in the spread. WTI is delivered at Cushing, Oklahoma, a landlocked hub where pipeline capacity and storage constraints can cause local price dislocations. When Cushing inventories are high and pipelines are full, WTI weakens relative to Brent. When pipeline capacity is ample and Cushing draws down, the spread tightens. By contrast, Brent is a waterborne crude priced at the North Sea, with ready access to global tanker shipping routes.

For energy market participants, the WTI-Brent spread is both a trading opportunity and an information source. A widening spread (WTI weakening relative to Brent) suggests US supply is outpacing infrastructure capacity or that international markets are tightening. A narrowing spread suggests US crude is flowing efficiently into global markets. Refiners, pipeline operators, and commodity traders actively trade the spread to exploit temporary dislocations, while macro analysts use it as a proxy for the relative balance of US versus international oil markets.