The global oil market is splitting along a fault line rarely seen in more than a decade. Brent crude is trading at a $13 premium to U.S. oil, and record shipping costs may be preventing the gap from closing.
Brent futures for December delivery traded at $106.30 a barrel on Monday morning, $13.85 above West Texas Intermediate (WTI) for the same month at $92.45.
That is nearly double the $7.08 gap on Sept. 21 and more than triple the $4.02 recorded on July 2.
The widening gap raises a question: Why aren’t traders buying cheaper American crude and selling it overseas at higher prices?
The answer may have less to do with President Donald Trump’s threatened diesel export ban than with the extraordinary cost of transporting oil.
Diesel Ban Odds Collapse, but Oil Spread Keeps Widening
In September, speculation that Trump could restrict U.S. diesel exports emerged as a leading explanation for WTI’s growing discount.
Wood Mackenzie estimated that a ban could force American refiners to cut crude processing by more than 2 million barrels per day, or roughly 12%, as domestic diesel inventories accumulated.
That would reduce demand for U.S. crude and put downward pressure on WTI prices.
But expectations of a ban have since faded.
Polymarket traders now assign roughly a 2% probability to Washington announcing a diesel export ban by Oct. 31, down from 12% at the beginning of October.
Yet over the same period, the December Brent-WTI spread widened from $11.47 to $13.71.
The declining probability of a ban suggests another force is sustaining the divergence between the two oil benchmarks.
Why a $13 Discount Isn’t Enough to Move American Oil
Normally, a wider discount pulls American crude overseas: traders buy cheaper WTI and sell it abroad, narrowing the gap.
But that depends on the cost of moving oil, and tanker rates have surged since the war with Iran disrupted shipping routes.
Two routes matter for WTI.
On U.S. Gulf to Rotterdam, the path that links American crude most directly to Brent, tanker earnings reached almost $308,200 a day last week, nearly four times the $79,600 seen just before the war, according to the Baltic Exchange.
On U.S. Gulf to China, a supertanker voyage cost $79.6 million, up $24.8 million in one week and up about 360% from before the war.
As tanker costs soared, U.S. exports stalled.
Kpler data showed U.S. crude shipments at 3.72 million barrels per day in August, up just 45,000 from July.
Goldman Sachs on Monday also cited elevated U.S.-Europe shipping costs. The bank projects Brent at $90 and WTI at $81 in December, with WTI averaging $73 in 2027.
Wall Street Is Already Pricing in the Divide
Over the past month, the United States Brent Oil Fund (NYSE:BNO) gained 8.68%, while the United States Oil Fund (NYSE:USO) slipped 0.40%.
The most dramatic moves are in shipping. The Breakwave Tanker Shipping ETF (NYSE:BWET), whose futures are 90% tied to the Middle East-China supertanker route, closed Friday at $998.30, compared with $19.26 at the end of 2025.
Frontline plc (NYSE:FRO) has gained 164.50% this year and DHT Holdings Inc. (NYSE:DHT) 103.30%.
U.S. refiners, which can benefit from discounted crude, have also outperformed. Marathon Petroleum Corp. (NYSE:MPC) is up 179.42% year to date, Valero Energy Corp. (NYSE:VLO) 165.70% and PBF Energy Inc. (NYSE:PBF) 208.34%.
U.S. producers have lagged: the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) fell 2.27% over the past month.
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