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Middle East Crude Premiums Hit Record Highs
16 Mar
Summary
- Oman and Dubai crude spot premiums hit all-time highs.
- Middle East crude exports to Asia fell significantly in March.
- Asian refiners seek alternative supply sources from Africa and Americas.
Spot premiums for Middle East crude benchmarks Oman and Dubai have reached unprecedented highs, even as trade volumes have drastically declined. These developments are attributed to supply disruptions stemming from U.S. and Israeli actions impacting Iran, which have also halted shipping through the Strait of Hormuz. This situation is forcing Asian refiners to face increased costs, leading some to reduce operating rates.
Concerns are being raised about the relevance of these benchmarks due to the thin trading and volatile price swings. The premium for cash Dubai surged to $56 a barrel on Monday, a significant jump from February's average of 90 cents. Similarly, Oman crude futures hit a record premium near $51 a barrel. In response, Asian refiners are actively seeking alternative crude supplies from the Americas and Africa, with spot premiums for these regions also rising.
Trade data revealed a substantial drop in Middle East crude exports to Asia in March compared to previous months. S&P Global Energy stated that Platts Dubai continues to reflect the value of Middle Eastern sour crude trading in the spot market, while also seeking feedback on its benchmark methodology. TotalEnergies has reportedly been a major buyer of available cargoes.
