Iran Conflict Drives U.S. Gulf Oil Prices to 2020 Highs

• Mars sour crude premium to WTI jumped from $1.50 to $11 in one week, the highest since April 2020, while Brent crude hit $92.69/barrel, its highest since October 2023
• The Strait of Hormuz closure has cut off key flows of medium and heavy sour crude from the Persian Gulf, forcing producers including Kuwait to curtail output
• Asian refiners are aggressively bidding for U.S. Gulf heavy grades as natural substitutes for lost Middle Eastern supplies, with analysts warning prices will continue rising until the strait reopens

Summary: Iran Conflict Drives U.S. Gulf Oil Prices to 2020 Highs

Key Developments:

U.S. Gulf Coast heavy crude prices surged to their highest levels since April 2020 amid escalating Middle East conflict. Mars sour crude, the flagship U.S. Gulf of Mexico grade, traded at an $11 premium to West Texas Intermediate (WTI) on Friday, March 6, 2026—up $4 from Thursday and a dramatic increase from just $1.50 a week prior. Other heavy grades including Heavy Louisiana Sweet and West Texas Sour also rose significantly.

Market Impact:

Brent crude settled at $92.69 per barrel, the highest since October 2023. The effective closure of the Strait of Hormuz has forced Middle Eastern producers, including Kuwait which announced additional production cuts Friday, to curb output. This strait is a critical route for medium and heavy sour crude from the Persian Gulf, with flows now largely halted.

Supply Dynamics:

Refiners dependent on Middle Eastern heavy crude are scrambling for alternatives, particularly Asian buyers. U.S. Gulf sour heavy and medium grades are natural substitutes and are being "bid up aggressively," according to Kpler analyst Matt Smith. The supply disruption coincides with the seasonal shift from winter to driving season, when demand typically increases.

Outlook:

Analysts expect prices for these grades to continue rising until the Strait of Hormuz reopens. Tim Snyder of Matador Economics emphasized that the war-driven supply disruption is the primary price driver in the short term. Goldman Sachs has warned oil could surge above $100/barrel if Hormuz flows don't recover.