What is the Brent-WTI spread and why does it matter?

The Brent-WTI spread is the price difference between international oil (Brent, priced in London) and US domestic oil (WTI, priced in Oklahoma). A normal spread is $3-5. When it widens past $10, it signals a global supply crisis where international oil carries a geopolitical risk premium. During the March 2026 Hormuz blockade, the spread widened to over $15, indicating severe supply dislocation for international buyers while US domestic supply remained relatively insulated.

Frequently Asked Questions

Q: Is the Strait of Hormuz still closed?

As of March 2026, the Strait of Hormuz is effectively blockaded. Iran's IRGC has restricted passage to vessels from approved nations only (China, Russia, India, Pakistan, Malaysia, Iraq). Ships from the US, Israel, UK, and EU are blocked. Only about 10 vessels per day are transiting, compared to 100+ before the conflict began on February 28, 2026. Transit requires Iranian vetting and costs approximately $2M per passage.

Q: Why are oil prices so high in 2026?

Oil prices surged above $100/barrel in March 2026 due to the Strait of Hormuz blockade, which removed approximately 20 million barrels per day from global supply. This is the largest oil supply disruption in modern history according to the IEA. Additional factors include Gulf smelter attacks on March 28, 50% US tariffs on steel and aluminum, and OPEC+ production restraint. The Brent-WTI spread widened past $15, indicating severe international supply stress.

Q: How does the oil price affect freight and shipping costs?

Oil prices directly drive freight costs through two channels. First, diesel (the fuel that moves freight) tracks oil prices with a 1-2 week lag. US diesel hit $5.37/gallon in March 2026, up 40% in 8 weeks. Second, the Hormuz blockade forced carriers to reroute around the Cape of Good Hope, adding 10-20 days and $300K-500K in fuel per voyage. Container shipping rates surged 150% since the blockade began. War risk insurance premiums jumped from 0.15% to 5-10% of hull value.

Q: What happens when strategic petroleum reserves run out?

The IEA released 400 million barrels from emergency strategic petroleum reserves in March 2026, the largest drawdown in history. Analysts at Goldman Sachs and Macquarie estimate these reserves could be exhausted by mid-April 2026 if the Hormuz blockade continues. When reserves deplete, there is no buffer against further supply disruptions, which would likely trigger a second-order oil price shock. The US Strategic Petroleum Reserve provides approximately 64 days of import cover, below the IEA-required 90 days.

Q: How much oil passes through the Strait of Hormuz?

Approximately 20% of the world's oil supply and 25% of global LNG (liquefied natural gas) passes through the Strait of Hormuz daily under normal conditions. That is roughly 20 million barrels of oil per day. The strait is a 21-mile-wide waterway between Iran and Oman, and it is the only maritime passage from the Persian Gulf to the open ocean.

Is the Strait of Hormuz still closed?

The blockade that began February 28, 2026 is still in effect, now past Day 100. Iran’s IRGC restricts passage to vessels from approved nations only (China, Russia, India, Pakistan, Malaysia, Iraq); ships from the US, Israel, UK, and EU remain blocked. Conditions change weekly. The live tracker and the latest Monday issue carry the current state.

View the live Hormuz tracker →

Why are oil prices so high in 2026?

Oil spiked above $100/barrel in March 2026 when the Hormuz blockade cut roughly 20 million barrels per day of flows, and Brent tagged $118 at the April peak. Prices have since settled into the $90s: macro data (jobs, CPI, the Fed’s hike tail) reasserted control over the tape even as the war continued, OPEC+ added barrels, and rerouting matured. The weekly issue tracks which regime is driving prices right now.

How does the oil price affect freight and shipping costs?

Oil drives freight costs through two channels. Diesel tracks oil with a 1-2 week lag, hitting $5.37/gallon in March 2026. The Hormuz blockade also forced carriers to reroute around the Cape of Good Hope, adding 10-20 days and $300K-500K in fuel per voyage. Container rates surged 150%.

What is backwardation in oil futures?

Backwardation is when near-month oil futures contracts are priced higher than contracts further out. It signals the market believes current supply is tighter than future supply. During the 2026 Hormuz crisis, WTI futures have been in persistent backwardation, indicating the supply squeeze is ongoing but not expected to be permanent.

What happens when strategic petroleum reserves run out?

The IEA coordinated large releases starting March 2026 and draws have continued weekly; the US SPR has fallen to the mid-350-million-barrel range, the lowest in decades. The ‘reserve runway’ is a standing line in the weekly scorecard: each EIA print updates how much buffer remains. A depleted buffer means the next disruption hits the price directly, with no shock absorber.

How much oil passes through the Strait of Hormuz?

Approximately 20% of the world’s oil and 25% of global LNG passes through the Strait of Hormuz daily. That is roughly 20 million barrels per day. The strait is a 21-mile-wide waterway between Iran and Oman.

What is the correlation between oil prices and crypto?

During the 2026 Hormuz crisis, oil and crypto showed a strong inverse correlation. When oil surged, crypto fell. Over 8 weeks, oil rose 43% while Bitcoin fell 14% and Solana fell 22%. Crypto markets trade 24/7, making them a leading indicator for traditional market reactions.

What is the Brent-WTI spread?

The price difference between international oil (Brent) and US domestic oil (WTI). Normal is $3-5. Above $10 signals a global supply crisis. During the Hormuz blockade, the spread exceeded $15.

How do you grade your calls?

Every forward-looking call is specific enough for the tape to settle it: no vague directional vibes, no unfalsifiable scenarios. The following Monday’s issue grades it RIGHT, PARTIAL, or WRONG. Grades are never retroactively changed, and published issues are never edited. The full ledger, misses included, is public on the track record.

Because the alternative is a newsletter that hides one. Forecasting oil through a war is hard; anyone claiming a high hit rate on falsifiable, deadline-bound calls is either not making real calls or not grading them honestly. We publish the by-type breakdown too, so you know which calls to weight (macro data) and which to discount (kinetic geopolitics).

Who writes Crude Signal?

Cross Mercer covers the point where markets and conflict intersect: oil, freight, macro, and kinetic risk. The method is the byline: every claim sourced, every call graded, every miss on the ledger.

Analysis by Cross Mercer. Updated weekly. Every call graded in public: track record.