PremiumWhat's Behind The Huge Divergence In Global Oil Prices
As discussed earlier, global prices for diesel and other heavier oil products have soared as the war between the United States and Iran interrupts exports from the world’s most important area for medium-density crude. Yet unlike diesel, benchmark oil prices have remained relatively contained, with Brent trading near $100/bbl and WTI around $95 despite the scale of the disruption, arguably one of the largest exogenous supply shocks in recent history.
At face value, this could be interpreted as market complacency. A closer examination, however, such as the one which JPMorgan's commodity head Natasha Kaneva did today, suggests a misalignment between benchmark pricing and the geography of the disruption.
The key issue is that both Brent and WTI are Atlantic Basin benchmarks, while the current shock is concentrated in the Middle East. As such, these benchmarks are disproportionally influenced by regional fundamentals that remain comparatively loose. Both the US and Europe entered 2026 with comfortable commercial inventories, and the broader Atlantic Basin remains relatively well supplied in the near term. In addition, the anticipation - and soon a partial realization - of SPR releases has further dampened prompt tightness in both Brent- and WTI-linked markets.
By contrast, Middle Eastern benchmarks such as Dubai and Oman provide a more accurate reflection of the physical dislocation. Both Dubai and Oman cash prices are now trading around $155/bbl, highlighting the severity of the shortage in barrels originating from the Gulf. These benchmarks are directly exposed to export disruptions and therefore capture marginal scarcity more effectively than Atlantic-linked crudes.
Crucially, the geography of trade amplifies this dynamic. Most crude shipments through the Strait of Hormuz are bound for Asia, and especially China, which together with India, Japan, and South Korea are the principal buyers. In total, Asia takes about 11.2 mbd of crude and 1.4 mbd of refined products that transit the Strait.
As a result, the immediate physical shortfall - and soaring oil prices - are concentrated in Asian markets, where reliance on Gulf barrels is greatest. Indeed, there are already early signs of demand destruction are emerging in Asia as product prices surge and spot barrels become prohibitively expensive.
Timing effects further reinforce this divergence. A typical voyage from the GCC to Asia takes approximately 10-15 days, while shipments to Europe require closer to 25-30 days via the Suez Canal, or even 35-45 days if rerouted around the Cape of Good Hope. As a result, the impact of disrupted Gulf flows will hit Asian markets earlier and more acutely, whereas Atlantic basin benchmarks such as Brent and WTI will remain cushioned for longer by inventory overhangs and slower supply adjustments. The US, which produces over 13 mmb/d of crude oil daily, will feel the lowest impact of all.
In this context, the apparent stability in Brent and WTI should not be taken as evidence of ample global supply. It reflects a temporary buffer created by regional inventory overhangs, benchmark composition, and policy interventions.
That said, JPMorgan warns that if the Strait does not reopen, this divergence is unlikely to persist, and Brent and WTI will ultimately reprice higher as Atlantic basin inventories are drawn down and the global market is forced to clear at a materially tighter supply level.
