Massive Light Sweet Crude Premiums & North Dakota’s 13% Workover Rig Surge
Supply Grab Pushes Patoka Premium to $9.50 Over WTI as Midwest Refiners Bid Aggressively, While Steep Backwardation Keeps New Drilling Tepid
Iran Conflict Driving Large U.S. Light Sweet Crude Premiums
The ongoing conflict in Iran and the resulting threat of a Strait of Hormuz closure continue to inject sharp volatility into global oil markets, tightening supply from the Middle East and pulling U.S. barrels strongly toward export. As previously noted, this global shortage has already widened spreads between Cushing and the Gulf Coast. Now the pressure has moved inland, creating unusual price dislocations across domestic light sweet crude grades for June delivery. Bakken crude at Dakota Access Pipeline receipt points is currently trading at a $5.60 premium to Cushing WTI, while the same grade in Guernsey trades at a more modest $3.30 premium. The standout anomaly is in Patoka, Illinois, where Bakken light sweet crude commands a staggering $9.50 premium to Cushing WTI.
The massive premium at Patoka likely stems from Midwest (PADD 2) refineries aggressively bidding up these light sweet barrels to secure domestic supply and avoid losing them to export markets, where international benchmarks such as Brent are already trading more than $11 above Cushing. This localized scramble is likely to shift some crude away from lower priced markets (Guernsey, Cushing) and toward Patoka in the near term, delivering short-term upside potential for pipelines like Dakota Access that deliver into the Patoka area.
North Dakota Oil Sees 13% Workover Rig Surge on Price Spike, But New Drilling Remains Tepid Amid Steep Backwardation
The North Dakota Department of Mineral Resources’ latest monthly Director’s Cut highlighted a notable uptick in producer activity following the recent oil price spike triggered by the Iran conflict. Workover rig counts in the state have risen approximately 13%, as operators focus on optimizing existing wells to bring incremental production online quickly. Workover rigs provide a faster and lower-capital route to incremental barrels compared to new drilling, allowing producers to capitalize on elevated near-term prices without committing to large-scale development programs.
However, new horizontal rig additions remain tepid due to the steeply backwardated WTI forward curve, with 2027 prices hovering just above $70 per barrel. While it is reported that one Bakken operator has committed to picking up a rig and frac crew for July, and another is considering a similar move, broader capital spending discipline persists across North Dakota and the wider U.S. shale patch. This market structure signals that even if Middle East supply disruptions persist, U.S. production growth is likely to remain muted in the medium term, as producers remain wary of locking in incremental capital at today’s uncertain longer-dated prices.
Flow/Transaction Updates and New Assets Under Coverage
Plainview has over 300 assets with crude oil flow or transactional data on our platform and continues to add more each week. Data for existing assets under coverage are posted as soon as they become available. Below are the assets that were updated this week or newly added to coverage.
