A substantial drop in the spot market price for Emirati crude has triggered a demand surge from Asia, Reuters reported today, citing data for a record trade of 10 million barrels of Murban crude on an S&P Global Platts market-of-close basis this month.
“Asian markets have been oversupplied with light grades for most of this cycle, driven by outages at Japanese refiners, increased UAE availability this cycle following the accelerated OPEC+ unwind, and planned maintenance at Saudi Arabia’s Petro Rabigh refinery,” Energy Aspects analyst Richard Jones told Reuters.
Yet demand for Murban has done well as its premium on the spot market has dropped to the lowest in six months. The grade represents some 66% of Adnoc’s total oil production and has a lead role in price setting in the Middle East. According to Reuters, Murban affects the pricing of 14 million barrels of oil exports to Asia daily.
The Emirati oil major expects production of the grade to top 1.7 million barrels daily in June, July and August, which means more downward pressure on its price and likely drive stronger demand from Asian buyers. One unnamed Reuters source said output of the key grade could top 2 million barrels daily in July.
Earlier this month, Bloomberg reported that a couple of Chinese independent refiners had bought two Murban cargos in a sign of a shift from Iranian crude to alternatives amid the U.S. sanction squeeze on one of China’s top discount oil suppliers. The price of the Emirati crude was $5 above the ICE Brent contract for August, the report noted.
In March and April, the U.S. sanctioned two small independent Chinese refiners for purchasing and transporting Iranian oil, as part of U.S. President Donald Trump’s “maximum pressure” campaign on Iran to force it to negotiations over its nuclear program.
By Irina Slav for Oilprice.com
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