The difference between the two benchmarks briefly widened to more than $8 a barrel, the widest gap since April 2015, reflecting surging USA crude supplies and a greater geopolitical risk to Brent-based crudes.
In a monthly report issued Monday (https://www.eia.gov/petroleum/drilling/#tabs-summary-2), the Energy Information Administration said crude-oil production from seven major US shale plays is expected to see a climb of 144,000 barrels a day in June to 7.178 million barrels a day. EIA estimates global oil consumption-weighted gross domestic product (GDP) growth for 2018 will be at its highest rate since 2012.
"You have the threat that a high enough price will start to activate the 7,700 drilled but uncompleted wells in the Lower 48 states", said Walter Zimmerman, chief technical analyst at ICAP TA.
While it is still unclear how USA sanctions will affect output from the third-largest OPEC producer, the move has helped oil prices rise.
World oil prices have surged by more than 70 percent over the past year as demand has risen sharply but production has been restricted by the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and other producers including Russian Federation.
The tightening market has all but eliminated a global supply overhang that depressed crude prices between late 2014 and early 2017.
Greater GDP growth has the potential to increase oil consumption beyond forecasted levels, which could put upward pressure on crude oil prices, and simultaneously drive systemic market movements in equities, bonds, and other commodities, which are often correlated with movements in crude oil prices.
Refinery runs in March also jumped to a record as import quotas for the small independent refiners-the so-called "teapots"-were increased and refinery margins stayed healthy".
Oil settled higher Tuesday, with supply concerns tied to political unrest in the Middle East lifting prices for the global crude benchmark to its highest finish in 3 1/2 years.
OPEC, for its part, estimated that the excess oil inventories in the OECD had shrunk to just 9 million barrels.
Iran's oil buyers continue to buy its crude, assessing the implications of the sanctions during the 180-day wind-down period.