Singapore — Middle East crude benchmarks have surged to unprecedented levels, becoming the most expensive globally despite declining trade volumes amid the US-Israel conflict with Iran. Analysts say supply disruptions and reduced market activity have distorted pricing, raising concerns about benchmark reliability.
Supply constraints drive sharp price surge
Cash Dubai crude climbed to a record $153.25 per barrel for May-loading cargoes, surpassing Brent’s historic 2008 peak. At the same time, Oman crude futures reached $147.79 per barrel, while premiums over Dubai swaps expanded sharply.
Moreover, Dubai’s premium to swaps jumped to $56.01 per barrel, a dramatic increase from February’s average of 90 cents. However, traders argue that thin trading and limited available grades have inflated prices beyond realistic levels.
Meanwhile, Middle East crude exports to Asia dropped significantly. Shipments fell to 11.665 million barrels per day in March, down from nearly 19 million bpd in February. The decline reflects disruptions to shipping routes through the Strait of Hormuz, which has constrained supply flows.
Benchmark concerns and shifting trade patterns
Furthermore, refining sources questioned the credibility of current benchmarks, citing reduced participation in pricing mechanisms. Some argued that remaining crude grades, including Oman and Murban, no longer accurately represent regional supply.
In addition, trading activity has narrowed, with TotalEnergies reportedly emerging as the dominant buyer in recent transactions. This concentration has further skewed price signals in the market.
Consequently, Asian refiners have started seeking alternative supplies. Premiums for crude from Brazil and West Africa have risen sharply as buyers attempt to offset Middle Eastern shortages.
As uncertainty persists, market participants continue to reassess pricing mechanisms and sourcing strategies in response to ongoing geopolitical tensions.
