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West Texas Intermediate crude, the reference point for US oil prices, usually trades at a discount of a few dollars to Brent crude, the global benchmark.

But this morning, the near-term futures contracts for WTI and Brent are both roughly $115 per barrel — an indication of how the market has been scrambled by the pandemic and the war in Ukraine ahead of the busy summer driving season.

“This is a significant development in my opinion,” Jeffrey Halley, a senior market analyst at Oanda, told clients on Tuesday.

Quick rewind: Oil prices have jumped over the past week. Both WTI and Brent are trading near two-month highs. The national average for regular gas in the United States hit a fresh record of $4.52 a gallon on Tuesday, according to AAA.

The main contributor to the run-up in prices is Europe’s consideration of a formal embargo on oil from Russia to punish Russian President Vladimir Putin, which is pushing countries in the bloc to race to secure supplies from other markets.

Energy prices are also rising as China indicates it intends to ease some restrictions on movement in the coming weeks, which could drive up demand for fuel after a lull.

On Monday, Shanghai officials announced a three-stage plan to “return to normalcy” by mid-June, and said Tuesday that the community spread of Covid-19 outside quarantined areas had been eliminated, an important turning point.

Aviation within China has increased from 25% at the start of this month to 40%, Janiv Shah, an analyst at Rystad Energy, told me.

This all comes ahead of summer in the United States and Europe, when demand for fuel leaps as people jump in their cars and head out on road trips and other vacations.

A new wrinkle: That oil prices are climbing in a tight market where supply can’t keep up isn’t surprising. But it is unusual for WTI and Brent crude to trade so close to each other.

Shah said the problem boils down to Europe’s pivot away from Russia’s Urals crude, which has triggered a mad dash to find replacement barrels in other parts of the market.

“We’re seeing the lack of these Russian crudes in the European refining system,” Shah said. “What that has done is increase the value of all remaining grades.”

At the same time, US refiners are trying to ramp up activity to meet demand, which is also squeezing WTI higher.

The takeaway: Oil traders in the West have fewer options than they used to, as they worry about running afoul of sanctions on Moscow and dealing with difficult logistics in the Black Sea. That means they’re buying whatever they can get their hands on — which in turn distorts the market.

One caveat: If you look at WTI and Brent for delivery in July, US oil is still trading at a discount of more than $2 a barrel, though the margin has narrowed significantly since May.

Abnormal dynamics could persist in oil trading for some time. Saudi Arabia’s energy minister said Monday that even if countries that could theoretically increase production, refiners couldn’t keep up.

“There is no refining capacity commensurate with the current demand and the expectation of the demand in the summer,” Prince Abdulaziz bin Salman said at an energy conference.

Musk says Twitter deal is held up on bot questions

Elon Musk escalated a public feud with Twitter’s CEO early Tuesday, saying his acquisition of the social media company “cannot move forward” until he sees more information about the prevalence of spam accounts.

Without citing a source, Musk claimed in a tweet that Twitter (TWTR) is “20% fake/spam accounts” and suggested Twitter (TWTR)’s filings with the Securities and Exchange Commission were misleading. The company has said that less than 5% of its daily active users are spam accounts.

“My offer was based on Twitter’s SEC filings being accurate,” Musk said. “Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.”

Step back: The latest tweet from Musk cast more doubt on the fate of the $44 billion deal. Musk on Friday declared it was “temporarily on hold” but that he’s “still committed to acquisition.”

That pivot fueled speculation that the world’s richest man may be using the debate over bots to secure a better price for Twitter, either as a negotiating tactic or out of necessity.

Twitter’s shares were down almost 2% in premarket trading Tuesday. The stock has erased all its gains in the weeks since Musk disclosed his stake in the company and is now trading at $36.80 per share — well below Musk’s offer price of $54.20 per share.

Unconventional tactics: On Monday, he exchanged a series of tweets with Twitter CEO Parag Agrawal about the spam account issue.

Twitter suspends “over half a million spam accounts every day,” Agrawal wrote. He also reiterated the 5% statistic, saying that estimate is based on “multiple human reviews” of thousands of accounts” sampled at random.

The company has previously acknowledged that while it believes its estimates to be “reasonable,” the measurements were not independently verified and the actual number of fake or spam accounts could be higher.

Musk replied to Agrawal’s initial tweets with a poop emoji.

Why India’s wheat export ban startled investors

A month ago, as Russia’s war in Ukraine pushed the world to the brink of a food crisis, India’s Prime Minister Narendra Modi offered to help countries facing shortages.

“We already have enough food for our people but our farmers seem to have made arrangements to feed the world,” Modi said in April. “We are ready to send the relief from tomorrow itself.”

Now, those lofty goals have been abandoned, my CNN Business colleague Diksha Madhok reports. The country recently banned wheat exports as life-threatening heat waves in South Asia stunt output and push local prices to record highs.

The move shocked international markets on Monday. Global wheat prices spiked 6%, with futures trading in Chicago hitting $12.40 per bushel, the highest price in two months. Wheat futures dropped back a little Tuesday, but are still up nearly 50% since the war started.

While India is a huge wheat producer — even this year, the country is expected to produce over 100 million metric tons — most of the grain is used to feed its population of 1.3 billion. By the government’s own admission, the country is “not among the top 10 wheat exporters.”

But the alarm its export ban caused underscores the fragility of global food supplies and the extent to which traders of agricultural products remain on edge. Protectionism from countries like India only exacerbates those concerns.

Up next

Walmart (WMT), Home Depot (HD) and JD.com (JD) report results before US markets open.

Also today:

  • US retail sales for April arrive at 8:30 a.m. ET. Economists forecast that they grew by 0.8% month-over-month, rising slightly.
  • Federal Reserve Chair Jerome Powell speaks at a Wall Street Journal event at 2 p.m. ET.

Coming tomorrow: More earnings from retailers, including Lowe’s (LOW), Target (TGT) and TJX (TJX).