WTI goes global
Overview
WTI Midland is now the world’s largest freely traded grade of crude oil by output and volume. In December 2015, the US lifted a 40-year ban that had restricted exports of US crude overseas. Since the ban was lifted, export volumes have soared and US crude now makes its way to markets all over the world.
The meteoric rise of US crude on the global stage has made Permian basin crude WTI Midland the world’s most important grade and has put the US Gulf coast at the epicentre of global crude trade. Houston is the point of greatest optionality for crude oil. From Houston, crude can be refined in the world’s largest refining centre, moved domestically within the world’s largest oil demand hub, and exported to all corners of the globe. Price dictates these options, making the price at Houston the source of all key comparisons.
Light sweet WTI Midland is now firmly at the centre of price discovery for crude oil. It is a key component of Dated Brent and the global swing barrel, and European and Asian buyers are beginning to purchase crude on a WTI Houston basis. This crude has truly emerged as the heartbeat of the global crude system.
A global waterborne crude, underpinned by a liquid pipeline market
In most major markets, crude oil is generally transported by water. But the WTI Houston and Midland markets are different, with oil travelling first by pipeline in small, rateable transactions. The high volume of daily transactions means that there are many points of price discovery throughout the day. Our expert team of crude oil market reporters endeavour to capture it all.
Cargo markets by nature consist of a few, large single trades. But at the US Gulf coast, cargoes are priced at a differential to the pipeline market, so they benefit from the underlying price dynamics of the highly liquid and transparent US pipeline market.
For this reason, understanding the WTI supply chain and the drivers of its price formation is imperative for anyone buying, selling or trading crude oil across the globe.
WTI and Argus, a deeply rooted relationship
For two decades, Argus WTI assessments at Midland and Houston have been the standard physical benchmarks for US crude, as well as the settlement indexes for a robust derivatives market. These prices are assessed as differentials to the Argus WTI formula basis, based on the Nymex light sweet crude futures contract — one of the world’s most actively traded oil futures. They are the clear choice for trading companies seeking to manage WTI positions in the physical and paper markets.
Argus WTI Houston and Argus WTI Midland collectively form the basis of the world’s third-largest crude oil derivatives market, after Nymex light sweet and Ice Brent. The contracts are actively traded over the counter and cleared by oil brokers through exchanges such as CME and Ice.
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Q&A: ExxonMobil sees pathway to eight Guyanese projects
Q&A: ExxonMobil sees pathway to eight Guyanese projects
New York, 3 March (Argus) — ExxonMobil has a "line of sight" to eight projects in Guyana, which will help drive up production from the prolific offshore Stabroek block in coming years. And more is possible as the prospecting licence for the block still has another two-and-a-half years to go, ExxonMobil's Guyana president, Alistair Routledge , told Argus' Stephen Cunningham in an exclusive interview on the sidelines of the recent Guyana Energy Conference and Supply Chain Expo in Georgetown, Guyana. How will this year's general elections affect your operations in Guyana? We take a long-term perspective. Our job is to work with whichever administration is voted in, and to ensure that it's a collaborative relationship, it honours past commitments, and also that it ensures the long-term attractiveness of this location for future investment. How do you view Guyana's shallow-water blocks? We participated in the 2022 licensing round, and we were awarded the S8 block, along with our partners, [US firm] Hess and [China's] CNOOC. We continue in our discussions with the government to try to finalise a petroleum agreement. What about other deepwater blocks? We recently relinquished our interest in the Kaieteur block. Just as we looked at the opportunity space there, it didn't stack up in our global portfolio of opportunities. But we did drill a well that encountered oil in the Kaieteur block, so we think we've helped derisk it for the remaining players. Canje block — we still hold equity in that, we're still the operator. I think it's three wells we've drilled in the Canje block. So we've taken the data from those wells, we're revisiting the seismic and figuring out is there another prospect to drill? Can you talk about your new state-of-the art offices here? These are deploying the latest digital technologies, particularly control room technologies. The fact that we pre-invested in a fibre optic network, so a loop to line that goes from onshore through the offshore fields and then back again, to enable us to transmit information in huge quantities, but also to have very little latency in those communications, which you'll probably understand for control room operations is critical. [Floating production storage and offloading unit (FPSO)] Liza Destiny is not connected to the fibre optic, but all of the subsequent FPSOs either are or will be, and that enables them to have an onshore remote operation. Starting from April, we'll start getting those control rooms up and running and, more gradually, migrate the control room operators from offshore to actually operating 24/7 from onshore. What are the lessons that can be learned from Guyana? The partnership between the government and the operating companies is essential. Having a long-term perspective, creating a shared vision, and then working together to achieve it. That has been one of the strengths in Guyana. Then it's the partnerships that live within the industry, or the prime suppliers, the local suppliers with the overseas expertise, bringing all of that together. What about natural gas? We always have kept an eye on the value and opportunity space with the associated gas on the oil fields, but the first priority has always been to ensure that we're maximising the overall recovery of resource. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Guyana’s boom tests the ‘oil curse’ challenge
Guyana’s boom tests the ‘oil curse’ challenge
New York, 3 March (Argus) — Passengers arriving at Cheddi Jagan International Airport just south of Guyana's capital do not have long to wait to see first-hand how a recent oil boom is transforming the economic fortunes of this tiny South American nation. In the arrivals hall, visitors are greeted with billboards advertising everything from heavy machinery to elite security services and banking. And on the hour-long drive into Georgetown, signs of a construction spree are everywhere as work crews lay fresh tarmac on a road lined with lumber yards and building firms. Yet the once-in-a-generation oil discovery at the giant Stabroek block 120 miles off the coast of Guyana by an ExxonMobil-led group in 2015, which has catapulted the once impoverished nation into the world's fastest-growing economy, is still in its early stages. And Guyana's emergence as the newest petrostate will see the former British colony with a population of 800,000 become a key source of non-Opec supply growth, with output due to rise to 1.3mn b/d by the end of the decade from 650,000 b/d this year as new projects come on line. ExxonMobil's experience in Guyana has been extraordinary, and Stabroek's full potential has yet to be fully tested. "In most basins, this takes even two decades to get to the point from discovery to development. Here we are a decade in — we're already at 650,000 b/d and yet we are still very much exploring the basin and testing for new plays," the US major's Guyana president Alistair Routledge tells Argus . With two and a half years yet to run on its exploration licence, "there's another third of the block that we haven't been able to access as yet", he says. "The running room here in Guyana remains exciting." But many locals complain that the country's newfound oil windfall has been slow to trickle down to the general population, while poverty rates remain high, especially in rural areas. And a dependence on oil also risks leaving Guyana, located on South America's northern coast bordering Venezuela, Suriname and Brazil, at the mercy of volatile commodity markets. The jobs bonanza that followed the discovery of billions of barrels of crude is welcome, but taxi drivers grumble that training to get a foothold in the oil and gas industry is expensive and can be difficult to come by. That has led the government to offer free tuition and expand training opportunities. Its record on spreading the benefits of the country's oil boom will be put to the test in national elections later this year. Security concerns For the hundreds of industry executives who descended upon the Guyana Energy Conference and Supply Chain Expo this month, sharing in the spoils of the oil boom was the key draw. Outside the venue, dozens of booths were crammed into an exhibition centre. Travel operators, shipping brokers and a real estate firm pitching Guyana's first Florida-style gated community competed for the attention of conference attendees alongside oil and gas service providers. There was also a disproportionately large number of private security firms, with one offering services ranging from defensive driving to tests for substance abuse and first aid. Inside the conference, government ministers talked up their efforts to diversify the economy as well as manage the country's new oil riches at the same time. Keen to avoid being tagged with the "oil curse", whereby nations that make sudden discoveries often end up worse off because of mismanagement, Guyana is boosting its non-oil sector including agriculture, mining, tourism and construction. "So far, we've been doing a good job," natural resources minister Vickram Bharrat said when asked if the nation could avoid a similar fate as some of its less fortunate predecessors. That has led to up-and-coming producers from Suriname and Namibia beating a path to its door as they seek to learn how Guyana has handled its oil wealth in such a short period of time. Ahead of the elections, the main opposition party has made noises about renegotiating the terms of Guyana's production-sharing contract (PSC) with the ExxonMobil-led consortium. The current administration has ruled out such a move for fear of alienating foreign investors, even though it concedes the terms of the contract could have been better. "Our position has been crystal clear," Bharrat told Argus. "We are not renegotiating the Stabroek PSC," he said. For its part, ExxonMobil has cautioned against any move that would undermine its long-term investment plans and called for contract terms to be respected. ExxonMobil, operator at Stabroek with a 45pc stake, says 2025 is shaping up to be a "very pivotal" year for the company in Guyana as the pace of projects speeds up. ExxonMobil also acknowledges the Guyanese government's impatience for faster progress on natural gas developments. "We want to move quickly," Routledge told the energy conference. "But for those in the industry, you will understand the additional complexity and challenges that gas brings." That includes higher transport and storage costs than oil as well as a lower energy density. Initial plans include a gas-to-energy project to fuel a power plant, for which the pipeline segment is already complete. And ExxonMobil sees further opportunities to build out gas production to potentially support data centres behind the artificial intelligence boom, and a fertilizer plant, as well as accessing global markets through LNG technology. Disputed land On the eve of the energy conference, six Guyanese soldiers were wounded in a border skirmish with a suspected Venezuelan gang, risking a further escalation in long-running tensions between the two nations. Venezuela has long laid claim to the resource-rich Essequibo region, which covers two-thirds of Guyana's territory. The territorial dispute has only worsened since Guyana's unprecedented offshore discovery, with Venezuela at one stage threatening to annex the region. The issue has been referred to the International Court of Justice, but Venezuela has disputed the court's jurisdiction. And in the meantime, Guyana has forged closer military ties with the US. The US ambassador to Guyana has noted that US secretary of state Marco Rubio wasted no time in touching base with the nation's president Irfaan Ali, calling him seven days into the start of the new Donald Trump administration. According to the readout of their conversation, Rubio doubled down on US support for Guyana's sovereignty in the face of the "bellicose actions" of Venezuelan president Nicolas Maduro and his "cronies". With the new US administration indicating this week that it may once again tighten sanctions on Caracas by not extending a sanctions waiver there for Chevron, cross-border tensions with Georgetown may remain high. But Guyana's government is sitting on the sidelines while a dispute between ExxonMobil and rival US major Chevron over the future of US independent Hess' 30pc stake in Staebroek plays out. Chevron's pending $53bn takeover of Hess was largely driven by that stake, but ExxonMobil argues it has a right of first refusal for Hess' share. An international arbitration case will resolve the issue in May. ExxonMobil will remain operator whatever the outcome, Routledge tells Argus. "Our position was clear from the start," Bharrat says. "If that was not going to affect the operations in Guyana — and we were told it will not — then we are fine." Guyana has a "good relationship" with Hess, which has agreed to buy carbon credits from the government, he says. "We have no issue with Chevron coming in either. Chevron would add value to the Guyana basin." By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
US refiners pin hopes on closures to boost margins
US refiners pin hopes on closures to boost margins
Houston, 3 March (Argus) — US independent refiners' fourth-quarter earnings dropped sharply as refining margins slumped, but upcoming refinery closures and a heavy spring maintenance season could bolster crack spreads later this year. The largest US refiner by capacity, Marathon Petroleum, reported a drop in its margins to $13/bl in the fourth quarter, from $18/bl in the same quarter of 2023. Its profits declined to $371mn in the quarter, from $1.5bn a year earlier. But Marathon expects margins to strengthen in the second half of this year, as announced refinery closures offset recent capacity additions, according to its chief executive Maryann Mannen. As much as 800,000 b/d of global refining capacity could be shut this year, helping to tighten the market and improve margins. Two large US refineries are scheduled to close down permanently — LyondellBasell's 264,000 b/d facility in Houston, Texas, is in the process of shutting and Phillips 66 plans to close its 139,000 b/d Los Angeles plant by the end of this year. Tightening supply is already helping to balance the market in the western US. Independent HF Sinclair says unplanned shutdowns and the start of maintenance in California are benefiting its refineries in neighbouring states that sell products to the region, including facilities in Anacortes, Washington, and Salt Lake City, Utah. California's supplies tightened after PBF Energy's 156,400 b/d Martinez refinery in the state was shut following a 1 February fire. And the market is bracing for a tighter market next year after the Phillips 66 plant closes. Phillips 66 reported a fourth-quarter loss in its refining businesses as margins narrowed. Crude refining margins fell to $6/bl in the fourth quarter, down from $14/bl a year earlier, it says. Narrower margins drove a $775mn fourth-quarter loss in its refining segment, compared with a profit of $859mn in the fourth quarter of 2023. The narrower margins partly reflected accelerated depreciation associated with the planned Los Angeles refinery shutdown. A burgeoning renewable fuels segment is offering some respite from the earnings downturn. Phillips 66's renewable fuels business made a $28mn profit in the fourth quarter, pushed up by higher margins at its Rodeo renewables plant in California and stronger international results. Valero's refining segment dropped sharply in the fourth quarter, as operating income fell to just under $440mn, from $1.6bn a year earlier. But its renewable diesel business, which includes a joint venture with Diamond Green Diesel, reported operating income of $170mn in the fourth quarter, up from $84mn in the same period a year earlier. Unclear outlook Despite the rapid growth in US renewables, the overall outlook is unclear. The prices of credits tied to US state and federal clean fuel programmes remain relatively low, cutting into margins for biofuels producers. A tax credit for biomass-based diesel blenders was replaced this year by a new subsidy that can exclusively be claimed by US producers. Companies that produce biofuels say they need more clarity from the US government on how the new tax credit works before they follow through on plans to increase production. Refiners in the US are worried about continuing to rely on government subsidies for renewables projects. US independent refiner CVR Energy intends to pause spending on its renewables business until there is more regulatory clarity in the country. "We've had all we can stand of exposure to government subsidies and it's going to take a shift change for us to really invest in it," CVR Energy chief executive David Lamp says. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Looming tariff war adds to US refiner headwinds
Looming tariff war adds to US refiner headwinds
Houston, 3 March (Argus) — US independent refiners, already facing weaker margins, falling demand and regulatory uncertainty in their burgeoning renewables businesses, are braced for another imminent headwind from US tariffs. The US may impose a 10pc tariff on energy from Canada and a 25pc tariff on all imports from Mexico starting on 4 March. Refiners are scrambling to find alternative supplies, including switching to lighter crude slates, but this will come at a cost. Although short-term margins are due to improve with refinery closures and maintenance, a sustained tariff war could add another long-term problem. The potential tariffs come as US independent refiners including Marathon Petroleum, Valero and Phillips 66 are coming out of a rough fourth-quarter earnings season, with lower margins cutting into profits year on year. The tariffs have already caused problems in North American oil markets as trading desks struggle to understand how they would work in practice and some buyers hold off from committing to taking March cargoes until details are clarified. But one thing is becoming clear — tariffs will lead to higher feedstock costs and will cause some refiners to reduce runs, cutting further into profits. US independent refiner PBF Energy chief executive Matthew Lucey says tariffs on Canadian crude would cause US midcontinent refineries to cut throughputs, even if they find alternative crudes. Marathon Petroleum, the largest US refiner by volume, says it could pivot some of its midcontinent refineries to run domestic crude slates such as Bakken from North Dakota and Montana, crude from the Rockies, or crude from the Utica and Marcellus shale regions in the northeast US. Tariffs would lead to price increases, but most of it "will ultimately be borne by the producer" and to a lesser extent the consumer, Marathon chief executive Maryann Mannen predicts. Smaller refiner HF Sinclair also says it could switch to alternative, lighter crudes at its refineries if tariffs are implemented. Several refiners agree with Marathon that producers would bear the brunt of the tariff costs, but the impact on oil prices will have repercussions throughout the industry. US bank TD Cowen expects US refiners that run Canadian crude on the margin to switch to light sweet crude, increasing WTI and Brent prices. Meanwhile, inland refiners that run Canadian crude as a core part of their slate are likely to continue to do so, the bank says. Phillips 66's executive vice-president of commercial Brian Mandell agrees with that assessment, saying that Western Canadian crude will continue to flow to US refiners, but at a greater discount. Sour taste Meanwhile, US Gulf coast refiners will be likely to replace Mexican and Canadian heavy crude with crude from other heavy sour producers such as Iraq, TD Cowen says. The switching will be likely to tighten medium and heavy sour differentials already tight from Opec+ curtailments and US sanctions against Russia. If it becomes too expensive to switch to heavy sour crudes, refiners could run less-efficient crude slates, reducing product supplied. Despite the headwinds, US refiners have expressed optimism that margins will improve in 2025 as a result of a heavy spring maintenance season and expected capacity closures. Two large US refineries are shutting down this year — LyondellBasell's 264,000 b/d Houston, Texas, refinery is in the process of closing, and Phillips 66's 139,000 b/d Los Angeles refinery is planned to be shut by the end of the year. Marathon says it expects the US refining industry to remain structurally advantaged over the rest of the world in the long term "mainly due to the availability of low-cost energy". But US tariffs — and the increase in prices that is likely to follow — could challenge that notion. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
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