(Bloomberg) -- Atlantic Trading and Marketing Inc., the trading arm of France’s TotalEnergies SE, is bidding up the US physical crude market, according to people familiar with the deals. 

West Texas Intermediate crude for delivery at Cushing, Oklahoma, has jumped to its highest premium since November, and that’s on top of futures surging above $90 a barrel. Overseas buyers must pay an additional $1-$2 barrel to get the crude shipped to the Gulf Coast for export. 

At these levels, American crude is quickly becoming too expensive for buyers from Asia to Europe who have relied on the US as the supplier of last resort to plug the global oil shortfall led by OPEC+ cuts. While that could result in more oil staying in the US, the price jump will inevitably filter through to higher gasoline and fuel costs in the US and beyond, threatening to quicken the pace of inflation everywhere.

TotalEnergies did not respond to requests for comment.

ATMI’s willingness to pay up for WTI crude is a reflection that high refining margins — the profit of turning crude into gasoline and diesel — are driving competition for US oil at a time when global supplies have tightened significantly. US refining margins remain historically high at around $30 a barrel even as fuelmakers enter seasonal maintenance. China processed a record amount of crude last month, and is increasingly looking to the US for imports as Russian oil gets pricer. 

The physical strength, which had been missing for much of the year, has caught some by surprise — the sweet, light quality of WTI isn’t optimal for replacing heavy, sour oils from Saudi Arabia and Russia. The rise in physical demand comes as futures have soared, in part because hedge funds are piling back into crude futures as prices rallied.

The surge came alongside significant moves in the shape of the oil futures curve. WTI’s nearest contract was trading as much as $1.33 above the next month on Tuesday, while the subsequent spread hit $1.71. Those premiums, the largest for months, indicate scarce supplies at the delivery point for futures at Cushing, Oklahoma. 

Stockpiles at Cushing have steadily eroded for the past three months to less than 25 million barrels, their lowest since December 2022. Further draws could threaten operations  — if stockpiles dip below 21 million barrels, the pressure in the tanks weaken and it becomes more difficult to extract the crude at the bottom, traders say.

--With assistance from Lucia Kassai and Sherry Su.

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