Middle East premium hits over 2-year high on strong demand from China, India
Spot premiums for Middle East crude rose to their highest in more than two years as strong demand from top importers China and India to replace sanctioned supply drove up prices, traders said.
The Biden administration on Friday announced sweeping sanctions targeting Russian producers and tankers, disrupting supply from the world's No. 2 producer and tightening ship availability.
That sparked a scramble among buyers in China and India, the world's top and third-largest importers, for alternative oil supplies and tankers.
Reflecting latest trades, QatarEnergy more than doubled its term price for al-Shaheen crude oil loading in March to $3.81 per barrel above Dubai quotes from the previous month, after awarding two cargoes to Totsa at premiums of $3.70-$3.80, trade sources said. Totsa is the trading arm of French major TotalEnergies.
The March term price is at its highest level since October 2022 for cargoes loading in December that year.
The deals came after premiums for Middle East benchmarks Dubai, GME Oman and IFAD Murban rallied this week to near $4 per barrel, the highest level in more than a year. [CRU/M]
In other deals, Unipec bought a March-loading Qatar Marine crude cargo in QatarEnergy's tender at a premium of just above $3 a barrel to Dubai quotes, 10 times higher than the previous month.
Sinochem bought March-loading Abu Dhabi Upper Zakum cargo from Cepsa, while Indian refiner Hindustan Petroleum Corp bought 1 million barrels Feb-loading Iraqi Basra Medium crude from Litasco at a premium of $1.90 per barrel above Dubai quotes in a purchase tender, trade sources said.
Premiums for light grades have also risen. QatarEnergy sold a March-loading Land crude cargo at a premium of above $2 a barrel above Dubai prices to PTT, traders said. All the Qatar cargoes are of 500,000 barrels each. Companies typically do not comment on commercial deals.
Prior to Friday's sanctions on Russian oil, Chinese refiners had already been seeking to replace Iranian supply on concerns that the incoming Trump administration will ramp up embargo measures on Tehran.
The latest round of U.S. sanctions against Russia could significantly disrupt the country's oil supply chains, the International Energy Agency said on Wednesday, although it held off on factoring the measures into its supply forecasts for now.
