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anjoazul
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Posts: 17
Joined: June 18th, 2017, 4:42 pm

What causes the spread between WTI and Bent

October 28th, 2018, 3:47 am

Could anyone explain what leads to the spread between WTI and BRENT oil price, and what will be the upper limit of the spread to cause export of oil from US to other country. 

Thanks!
 
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ppauper
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Joined: November 15th, 2001, 1:29 pm

Re: What causes the spread between WTI and Bent

October 28th, 2018, 5:58 am

WTI is lighter and sweeter than Brent

Until the dying days of the Obama administration, the US had an export ban put in place in 1975 during the Ford admnistration following the Arab oil embargo. The removal of the ban was added by Speaker Ryan to an omnibus spending bill in Dec 2016 which averted a government shutdown. The Democrats seem to have been opposed to the removal of the ban but went along with it because of horse-trading: they got what they wanted on other things.
Deal avoids shutdown, but not everyone is happy
The deal also included President Obama's muslim ban
and overhaul the visa waiver program, barring anyone who had visited Syria, Iraq and other possible terrorist hotspots in the last five years from entering the U.S. without a visa
Cushing, Oklahoma is the delivery point for WTI, and that's been a problem in recent years in that there have been transportation bottlenecks getting to/from Cushing, and the result has been that the price in Cushing has been at times a lot lower than the price on the US east coast.
The arbitrage lies not so much in exporting the oil from the US but in getting it out of Cushing. More and larger pipelines are needed but environmentalists protest when new pipelines are proposed
 
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anjoazul
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Joined: June 18th, 2017, 4:42 pm

Re: What causes the spread between WTI and Bent

October 29th, 2018, 5:30 am

@ppauper Thank you so much for your explanation. 
 
rickyvic2
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Joined: January 31st, 2019, 11:06 am

Re: What causes the spread between WTI and Bent

January 31st, 2019, 1:56 pm

@ppauper where one can find data on transportation cost or related shipping info?