Over the past month, we’ve written extensively about the widening regional Permian oil price differentials that have been driving Permian and WTI prices lower relative to Brent oil prices. To rehash: the disconnect is due to the Permian basin’s pipeline takeaway constraints that are now starting to back U.S. crude up through the middle of the country, driving Brent-WTI differentials and other mid-continent basin differentials wider. As we have noted in recent pieces, we are now modeling this problem to persist over the next 12 to 18 months. Here are the numbers: As of mid-June, Midland’s discount versus WTI has widened out to nearly $8.50/Bbl, over and above WTI’s discount versus Brent of about $8.50/Bbl leading Midland prices to be a whopping $17/bbl LOWER than Brent oil prices. More importantly, we believe the WTI to Brent spread will gradually widen in 2018 to a full $15/bbl driving the Midland to Brent discount to $25/bbl. While we are conservatively modeling this extremely wide Permian to Brent spread to remain in place through the end of 2019 (when additional pipes alleviate the bottleneck), we suspect the market will react to these extreme prices (through rail, trucking, DUC builds, etc.) and eventually drive the spread lower in 2019.