The December issue of the World of Petroleum and Bitumen
A decline in crude exports from Iran and Russia has driven up the value of Middle Eastern oil, with certain grades now trading at unprecedented premiums compared to Brent, the global oil benchmark. For instance, traders report that over the past two months, futures for Murban crude from the United Arab Emirates (UAE) have surpassed Brent in performance.
Similarly, Oman and Dubai crude prices have recently climbed to rare premiums over Brent, fueled by heightened demand in China and India. These two nations, traditionally major buyers of Iranian and Russian oil, have turned to Middle Eastern suppliers due to the diminished availability of crude from Iran and Russia.
Iranian oil has increasingly been stored in offshore facilities in Southeast Asia rather than delivered directly to customers. This shift comes after a wave of U.S. sanctions targeting tankers transporting Iranian crude has made Chinese buyers more cautious. In October, the United States intensified its crackdown, introducing sanctions on entities and vessels involved in the transport and sale of Iranian oil. Two months ago, the U.S. Treasury and State Department sanctioned companies from Suriname, India, Malaysia, and China for their role in transactions involving Iranian petroleum products. National Security Advisor Jake Sullivan highlighted that these measures also target the “Ghost Fleet,” which secretly ferries Iran’s oil to global buyers.
Russia’s crude exports have also declined, with shipments by sea decreasing. This reduction stems from mounting pressure on Moscow to adhere to its OPEC+ production limits, designed to stabilize oil prices. Additionally, international sanctions targeting Russia’s “shadow fleet” of tankers have further curtailed its export volumes.
Amid these changes, Saudi Arabia has regained a portion of the Asian oil market that it had previously lost to Russia. The Kingdom’s oil exports to Asia have risen, while Russian crude sales in the region have dipped, as China and India, Russia’s primary markets, have scaled back their purchases.
This shifting landscape underscores the growing demand for Middle Eastern oil as geopolitical pressures and sanctions reshape global crude supply and trade dynamics.
By WPB
Brent, Crude, Bitumen, Price, Market
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