For most of the modern oil-trading era — say, 1985 through 2010 — the price difference between West Texas Intermediate (WTI) and Brent crude oscillated in a tight band of $0 to $3 per barrel, with WTI usually slightly higher than Brent because WTI is a fractionally lighter, sweeter crude that yields slightly more high-value distillate at refinery. Then, beginning in 2011, the spread inverted and blew out. WTI traded $15 below Brent in early 2011, $25 below at the worst points of late 2011 through 2013, and only fully closed back into a near-parity range in 2014.

For three years, the same physical commodity — light sweet crude oil — traded with a regional spread larger than the entire intercontinental transport cost between the two benchmarks. That should not happen in an arbitrage-bound market. The reason it did happen is the cleanest illustration of how oil prices are made: not in a global abstraction, but at specific physical delivery points where infrastructure capacity determines whether the arbitrage can actually flow.