Middle East crude premiums fall back to pre-war levels on oversupply
Spot premiums for Middle Eastern crude have sunk back to pre-war levels, Reuters reports, as heavy supply and weaker Asian refining margins weigh.
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what happened
Spot premiums on Middle Eastern crude benchmarks returned this week to levels seen before the Iran conflict, Reuters reported. The drop reflects a surplus of barrels: Gulf producers boosted exports in September and October, and J.P. Morgan analysts say that build-up has outpaced demand, even though attacks on ships in the Strait of Hormuz have increased.
Dubai's cash premium over swaps fell to 65 cents a barrel on Monday, its lowest since July, then rebounded to $1.55 on Thursday. Oman's premium slid to 95 cents on Tuesday before rising to $1.76 by Thursday. Both are far below last month's average of roughly $8 a barrel. Cargoes loading in December, including Oman, Murban and Iraqi grades, were left unsold after October's trading round, according to three traders, and weighed on spot prices.
Shipments climbed in September, with UAE Murban hitting a record 2.4 million barrels per day, before easing to about 2 million bpd in October, according to Kpler. Iraqi flows reached 3.35 million bpd in October, only 150,000 bpd short of pre-war levels. Meanwhile, West African and Brazilian sellers have offered deeper discounts to Chinese buyers to offset high freight, adding competition for Gulf grades. Asian refiners are unlikely to buy more crude unless margins recover, one trader said; gasoline margins fell to their lowest since late February and diesel margins are around $60 a barrel, down from a mid-September record above $87, LSEG data showed.
why it matters
For physical crude markets, the narrowing premiums signal that buyers hold more leverage now and that the surplus is covering gaps in demand. Weaker refining margins reduce Asian refiners' appetite for barrels, so the physical market looks softer even as risks around the Strait of Hormuz persist.
market impact
Dubai and Oman physical crude: surplus cargoes push spot premiums lower
- Dubai and Oman spot premiums pressure down — surplus of Middle Eastern barrels and unsold December cargoes
tags
instruments
sources
- Middle East crude oil premiums tumble to pre-war levels amid ample supply — Reuters, 5 November 2026 at 10:31 UTC
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