Discounts for Dubai and Oman narrowed on Tuesday as more spot trade emerged, while the market kept an eye on shipping tensions in the Red Sea.
Attacks by Yemen’s Iran-aligned Houthi militants on ships disrupted maritime trade and forced shippers to reroute vessels.
This was unlikely to have large effects on crude oil prices, as vessel redirection opportunities imply that production should not be directly affected, said investment bank Goldman Sachs.
Nonetheless, the price of a Suezmax to carry crude from the Middle East to Europe has risen 25% in a week, according to Vortexa.
DUBAI OSP
Dubai has set its official differential to Oman futures 1OQc1 for March at a premium of $0.10 per barrel, the Dubai Department of Petroleum Affairs said on Tuesday.
VENEZUELAN CRUDE
China’s Sinochem Corp has bought a million barrels of Venezuelan crude oil for arrival in December, a rare purchase as the state oil and chemicals group capitalises on Washington’s suspension of sanctions on the South American producer.
Sinochem has agreed to buy the cargo of heavy Venezuelan Merey crude at a discount of $11 a barrel to dated Brent crude on a delivered ex-ship (DES) basis, three traders with knowledge of the purchase told Reuters.
The cargo is for delivery to Sinochem’s Changyi refinery in the eastern province of Shandong, one of several it runs in the refining hub after a state-mandated merger with ChemChina.
SINGAPORE CASH DEALS
Cash Dubai’s discount to swaps was at 3 cents a barrel, narrowing by 43 cents from the previous session.
NEWS
Middle East crude benchmarks Dubai and Oman hit their lowest levels since 2022 as low pre-holiday liquidity, soft demand from top buyers China and Japan, and a prompt Omani oil sale weighed on the market, according to Reuters data and traders.
Attacks by Yemen’s Iran-aligned Houthi militants on ships in the Red Sea are disrupting maritime trade and prompting U.S. efforts to build a coalition to deal with the threat, as freight firms reroute around the Cape of Good Hope to avoid the Suez Canal.
London’s marine insurance market has widened the area in the Red Sea it deems as high risk after a surge in attacks on commercial ships, according to a statement.
Turkey and Turkish companies have saved around $2 billion on energy bills in 2023 by raising imports of discounted Russian oil and refined products, Reuters calculation based on LSEG data and traders’ estimates showed, and Ankara wants to buy more from its neighbour despite Western sanctions
Crude oil is flooding out of Texas in the final weeks of 2023, as traders find outlets abroad for record U.S. production and dodge a hefty year-end tax bill on their inventories.
Source: Reuters (Reporting by Florence Tan and Jeslyn Lerh; Editing by Shweta Agarwal)