Brent Slips to $104.51 as Diplomatic Hopes Offset Houthi Attacks on Saudi Arabia; WTI-Brent Spread Widest Since May

Friday, September 25, 2026 | 6:45 AM ET

Brent (November) $105.52 | WTI (November) $92.93

Brent -$1.08 (-1%), WTI -$1.68 (-1.8%). For the week, Brent is up 1.5% while WTI has dropped 7.4%. Saudi Arabia intercepted six ballistic missiles aimed at Taif and the Yanbu area Thursday. US and Iranian negotiators in New York are reportedly exploring a phased path involving Hormuz reopening in exchange for lifting the US blockade. The WTI-Brent spread hit $12.83, its widest since May, on fears a US diesel export ban would strand domestic supply.

Bottom Line

Diplomatic hopes are helping crude weather the latest strikes, with prices trading softer even as Houthi attacks on Saudi Arabia continue. Iran's president Pezeshkian said Thursday it's up to the US to choose when the war ends, a notable rhetorical shift from defiance toward putting the onus on Washington, and sources close to the New York talks describe a phased framework, Iran reopens Hormuz, the US lifts its economic blockade, as the shape being discussed. None of that is confirmed agreement, but it's a more specific structure than prior weeks' vaguer diplomatic signals.

The diesel export ban story is now the dominant force driving the crude complex, and it deserves unpacking beyond the headline spread number. WTI traded as much as $12.72 under Brent today, the widest since May, purely on the expectation that US refiners would need to cut runs if diesel gets stuck domestically. Wood Mackenzie's math shows why: a ban would redirect roughly 700,000 bpd of diesel and gasoil oversupply into storage, filling Gulf Coast capacity within about a month and forcing crude run cuts exceeding 2 million bpd, a 12% reduction at current rates. That's the mechanism behind Reuters' framing of the spread as a double-edged signal, it could ease record $6.528 domestic diesel prices in the near term, but at the cost of tighter gasoline supply and, eventually, diesel prices rising again once refiners have cut back enough to shrink the surplus that a ban would have created.

The administration's actual position remains unsettled, and that uncertainty alone is enough to move the spread. The White House denied a 90-day ban report Wednesday, Energy Secretary Chris Wright said a ban wouldn't meaningfully control prices, yet Trump said Tuesday he backs the idea, and Wright has separately been contacting refiner executives about voluntary export restraint as a middle path. Three different signals from the same administration in the same week is itself informative: nobody has committed to a policy yet, which is exactly the kind of ambiguity that keeps a hedging-driven spread wide.

The freight and shipping-cost angle explains why the arbitrage implied by that wide spread isn't actually being acted on. Signal Maritime's Georgios Sakellariou noted that a wider WTI-Brent spread would normally increase demand for US exports, but rising freight rates have blunted that response. Shipping crude from the Gulf Coast to Asia on a VLCC now costs around $50 million, more than triple the $16 million before the war. Mizuho's Bob Yawger estimated the discount needed to offset that freight cost has roughly doubled to about $8 a barrel from $4 previously. The result, per Kpler data, is that US crude exports have barely moved, up just 45,000 bpd from July to August despite the spread trading $4 or wider since July 7, and September exports are on track to fall for a third straight month to their lowest since before the war

The Hormuz shipping bottleneck adds a separate layer of strain on the same tanker market. Ship-to-ship transfers in the Gulf of Oman have hit their practical limits as Saudi Arabia's diverted Red Sea volumes stack on top of existing Iraqi and UAE STS activity. Vortexa's Emma Li said a single STS operation now takes nearly 10 days, up from five to seven previously, and congestion near the strait is worsening. That's pushing Chinese buyers toward alternative transfer points like India's west coast or Malaysia's Linggi hub, or direct refinery delivery, illustrated by the Bahri VLCC Gold Shine heading straight to Quanzhou and S-Oil sending two VLCCs to conduct STS off Vadinar. Kpler's Panagiotis Krontiras estimated the nearly 3 million bpd increase in Saudi Hormuz exports, from about 900,000 bpd in August toward a tracked 3.6 million bpd in September, requires 36 to 40 additional VLCCs, and that demand pushed the Middle East-to-China VLCC charter rate to a record $1.27 million a day Monday. Despite all that congestion, Hormuz crude flows for the week starting September 20 held roughly steady at 33.7 million barrels, similar to the prior week, per Kpler, suggesting the system is straining but still moving comparable volume through sheer added tanker capacity.

Saudi Arabia's East-West pipeline is building pumping volume toward Yanbu again, though tanker loadings there haven't resumed yet, per satellite imagery and shipping data, another sign the kingdom is managing a gradual restart rather than an immediate return to pre-attack throughput.