SUBSCRIBER NOTE: Platts updates freight normalization in Mideast oil product assessments

Effective July 20, 2017, Platts is updating the approach to normalization of offers, bids and transactions loading from various Middle Eastern ports for reflection in its final FOB Arab Gulf spot premiums and FOB Fujairah assessments.

FUJAIRAH BASIS: Platts has previously announced that its FOB Arab Gulf spot differential assessments and FOB Fujairah outright assessments reflect loadings across the gulf, normalized to Fujairah as a basis port. In practice, this means that all bids, offers and transactions for ports across the region are considered in relation to FOB Fujairah bids, offers or transactions and in the context of the specific commodity being assessed.

GASOIL AND JET: For middle distillate products including gasoil and jet, Platts understands that prevailing flows for these fuels are currently out of the region, with jet fuel, gasoil and ULSD typically going to East Africa, the Mediterranean and Europe.

Therefore, Platts will consider market indications that include ports aside from Fujairah on the basis of prevailing freight economics to ship material to the Mediterranean as a basis destination.

For example, an offer for material loading from Mina Al Ahmadi, Jubail or Jebel Ali would be normalized on the basis of freight from the costliest of these load ports to the Mediterranean, compared with freight for a loading from Fujairah. This reflects the economic consideration for a typical buyer lifting an offer with more than one port specified at the seller's option.

Previously, Platts has considered such offers on the basis of the average of freight economics from each named load point to Fujairah.

GASOLINE AND FUEL OIL: For gasoline and fuel oil, Platts understands that prevailing flows for this fuel are currently intra-regional, and typically material is taken to Fujairah for blending purposes before being shipped to an ultimate destination in the region in the case of gasoline or blended and sold in smaller parcels for bunkering in the case of fuel oil.

Therefore, Platts will consider market indications that include ports aside from Fujairah on the basis of prevailing freight economics to ship material to Fujairah as a basis destination.

For example, an offer for material loading from Mina Al Ahmadi, Jubail or Jebel Ali would be normalized on the basis of freight from the costliest of these load ports to Fujairah.

Previously, Platts has considered such offers on the basis of the average of freight economics from each named load point to Fujairah.

Platts periodically reviews its methodology of all its assessments to ensure they are representative of current market fundamentals and trading patterns. Such reviews may lead to changes to the existing methodology.

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