Middle East Oil Prices Jump on Scant Flows from Iran, Russia

The price of some Middle Eastern oil grades strengthened in the final week of December on robust demand from Asian refiners, after barrels from Iran and Russia became sparse and more expensive.

Oman and Dubai crude surged to a rare premium to Brent, while Murban futures outperformed the global benchmark in the last two months of the year. Prices gained on higher demand from China and India, and active bidding on the so-called Platts window by companies such as TotalEnergies SE, according to traders.

While the market has started on a quieter note in January, traders said it’s still early and bidding can progressively intensify over the month. They are also waiting for official selling prices by major Middle Eastern producers such as Saudi Aramco, which would set the tone for buying.

Iranian and Russian oil flows have been disrupted by broadening sanctions from the US and Europe, while Moscow faced increased pressure to abide by OPEC+ production goals. At times, Oman and Murban prices can swing dramatically in the final sessions of each month due to low volumes, though they were already trending higher before that, suggesting market strength.

In late-December, Oman futures on the Mercantile Exchange and partial lots of Dubai crude were priced at US$1 or more over Brent, compared with a typical discount to the lighter and sweeter oil.

Cargoes of Russian ESPO to China recently traded at a premium of US$2 a barrel to Brent on a delivered basis, up from of premium of between 80 cents and US$1.50 in the past two months. Indian processors have also raised concerns over fewer offers for Russian Urals, prompting at least one refiner to seek alternatives.

The availability of Iranian supplies to Chinese buyers has slowed in recent weeks, with Iranian Light cargoes priced at a discount of US$1.50 a barrel to Brent, compared with a discount of US$2 to US$3 in late November. - BNN Bloomberg