Middle East crude oil premiums fall to levels seen before war
Ample supplies and cooling refining margins in Asia have driven spot premiums for Middle Eastern crude benchmarks down this week.
Spot premiums for Middle Eastern crude benchmarks dropped to levels recorded before the Iran war this week, according to the Economic Times. The decline comes as high supply levels and slowing buying interest from Asian refiners weigh on the market.
Middle Eastern producers increased crude exports during September and October. J.P.Morgan analysts stated this has resulted in a surplus, even with increased attacks on vessels in the Strait of Hormuz.
Dubai's cash premium to swaps fell to 65 cents a barrel on Monday, its lowest point since July, before rising to $1.55 a barrel on Thursday. Oman's premium reached its weakest level since July at 95 cents a barrel on Tuesday, before moving to $1.76 a barrel on Thursday.
These current premiums represent a significant decrease from the average of approximately $8 a barrel seen last month. Three market traders noted that unsold December-loading cargoes of Iraqi, Murban, and Oman crude from the previous trading cycle pressured the spot premiums.
Kpler analyst Naveen Das said United Arab Emirates' Murban crude exports hit a record 2.4 million barrels per day in September before easing to around 2 million bpd in October. Das also said UAE crude output rose above 3.9 million bpd in September, exceeding its pre-war level of 3.4 million bpd.
In China, independent refiners in Shandong province purchased between 8 million and 10 million barrels of November-loading West African crude last week. One trader noted that Asian refiners are unlikely to raise purchases unless refining margins improve.