Tehran (TDI): Oil prices linked to key Middle Eastern benchmarks have surged to record levels as the ongoing conflict in the region disrupts supply and trade flows.
Spot premiums for Oman and Dubai crude, widely used to price millions of barrels of Middle Eastern oil exported to Asia, have climbed sharply. Traders say the war involving the United States and Israel against Iran has significantly disrupted shipments, raising concerns about the reliability of these benchmarks, Reuters reported.
According to data from S&P Global Platts and Reuters, the premium for cash Dubai crude over swaps jumped to $56 per barrel on Monday, compared with an average of just 90 cents in February. The premium now represents roughly a third of the crude’s value, with Platts assessing May-loading cargoes at about $153 per barrel, while Murban futures were trading near $111.76.
Market participants say the price gap between Dubai and Murban crude has widened significantly, distorting the benchmark used to price regional supplies.
Read More: Oil Again Hits $100 Amid Iran War, Stocks Fall and Dollar Strengthens
Oman crude has also seen an extraordinary rise. Its premium to Dubai swaps climbed to around $51 per barrel, compared with an average of 75 cents in February.
The disruption has been largely driven by a sharp decline in oil shipments through the Strait of Hormuz, a crucial route for global energy supplies. Data from analytics firm Kpler shows Middle Eastern crude exports to Asia dropped to 11.665 million barrels per day in March, down from nearly 19 million bpd in February and about 32 percent lower than March last year.
With supplies tightening, several Asian refineries have begun cutting operating rates as the cost of crude climbs.
Some refining industry sources argue the dramatic price spike is partly due to limited supply available during the Platts Market on Close (MOC) trading process, particularly after the agency removed three crude grades that pass through the Strait of Hormuz from its assessment.
Read More: Oil Markets Climb Despite US Waiver on Russian Supply
Meanwhile, Asian refiners are increasingly turning to alternative sources of crude oil. Spot premiums for supplies from the Americas and Africa have risen as buyers scramble to secure cargoes.
Traders say Brazilian crude premiums have reached record levels of $12 to $15 per barrel above ICE Brent, while premiums for West African crude loading in April have increased by about $1 per barrel compared with a month earlier, with most available cargoes already sold.
