Spot crude oil premiums in the Middle East soared to multi-year highs this week as Asian refiners scrambled for supplies after the U.S.-Israel war against Iran crippled shipping in the Strait of Hormuz, halting oil flows, traders and Reuters data showed.
Rising prices for Asia’s main oils mean higher costs for the region’s refiners, who are struggling to find immediate substitutes and facing production cuts, pushing up oil prices globally.
Benchmark Dubai’s cash premium rose to $19.63 per barrel on Thursday, the highest recorded by Reuters since 2018. Premiums for Omani and Murban crude also soared, reaching $19.15 and $17.87 per barrel, respectively.
“With crude exports stuck within the Middle East Gulf, spreads in Dubai have skyrocketed, making price discovery nearly impossible,” said Richard Jones, an oil analyst at Energy Aspects.
“We expect the disruption in the Strait of Hormuz to continue until at least mid-March. There are concerns that if Oman and Fujairah Murban capacity is used up this cycle, valuing Dubai will become nearly impossible.”
alternative supply
The dispute has sent Brent crude soaring to a July 2022 high, widening its spread with Dubai Swaps, known as the Swaps Futures Exchange (EFS), to a premium of $10.42 per barrel as of Wednesday (compared to 69 cents at the beginning of 2026).
Widening price spreads make Brentlink grades more expensive for Asian buyers.
“The rise in EFS reflects how difficult it is for Asia to quickly replace crude oil from the Middle East. Asian buyers are competing more aggressively for crude oil available outside the Strait,” said Anne Pham, senior oil analyst at LSEG.
“Rising freight costs and longer sailing distances are making it difficult to transport barrels from more distant regions to Asia.”
Still, some Asian refiners source crude from the United States, Canada and Brazil at high premiums. For example, the discount for Canadian TMX crude oil deliveries to Asia has narrowed to $1 per barrel versus ICE Brent (from just over $4 a month ago).
Changes to Platts Dubai
Some traders said changes in the S&P Global Platts Dubai Crude Oil Price Rating further strengthened the benchmark’s strength.
Platts on Monday removed grades such as Al Shaheen in Qatar, Upper Zakum in the United Arab Emirates and Murban, loaded from Jebel Danna ports, as candidates for delivery during the market-on-close process, citing transport disruptions.
This means that only Murban can be delivered from Fujairah port and Oman, reducing the amount of crude oil available for delivery by about 40%, according to S&P Global Energy.
Another trader said the exclusion of Upper Zakum, which usually sets the benchmark, creates price distortion.
In a response to Reuters, S&P Global Energy said its methodology for Dubai includes alternative delivery mechanisms as a single crude oil stream cannot ensure liquidity continuity.
“The fact that Platts Dubai continues to effectively serve the market through its crude oil supply potential of more than 2 million barrels per day demonstrates the company’s resilience even during these most extraordinary times,” it said, adding that Platts is closely monitoring the situation and actively seeking feedback from the market.
Total Energy was the leading bidder at the Platts window, winning nine cargoes from Oman and Murban in the past four days, according to trade data.
(Reporting by Siyi Liu and Florence Tan in Singapore; Editing by Harikrishnan Nair)
