Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you a link to reset your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you a link to reset password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil | Shipping

APPEC: Benchmark crude price spread dislocation stirs new, unusual trade flows

Commodities | Electricity | Emissions | Renewables | Natural Gas | Natural Gas (European) | Oil | Crude Oil | Refined Products | Metals | Non-Ferrous | Coronavirus

Market Movers Europe, Sep 21-25: OPEC+ compliance takes the spotlight; Nord Stream 2 meets political controversy

Shipping | Marine Fuels

Platts Bunkerworld

Commodities | Oil | Crude Oil | Marine Fuels

Marine Fuel Strategy Seminar (at MEEPEC)

Oil | Crude Oil | Refined Products

Crude prices recover even as bearish fundamentals persist

APPEC: Benchmark crude price spread dislocation stirs new, unusual trade flows


Brent-Dubai convergence prompts sellers to seek unusual buyers

Far East Russian Sakhalin Blend crude pushed to San Fransisco

Abu Dhabi Murban cargoes seek buyers outside Asia

Singapore — The sharp volatility in outright crude prices and wild swings in benchmark price spreads have laid the foundation for new oil trade routes across the globe with suppliers selling their cargoes into unusual and new outlets so far this year, trading experts said at the S&P Global Platts Asia Pacific Petroleum Virtual Conference in Singapore Sept. 15.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The sharp price convergence between Brent and Dubai was one of the highlight price moves this year, with the sweet crude benchmark's fall to record-high discount against the Middle Eastern price marker in the second quarter prompting various Dubai-linked crude suppliers to find new and uncharted outlets across the globe.

Usually, sweeter crude grades should command premium as they are much easier to process, but the Brent-Dubai price convergence was one very "interesting picture" and the extent of the decline seen in the Brent-Dubai spread was "remarkable," said Stefano Grasso, Head of Trading for APAC at Eni Trading & Shipping, during Platts APPEC.

As a result of such price spread dislocation, the market has started to witness "weird" trade flows unfold, Grasso said.

The Brent/Dubai EFS -- a key indicator of Brent's premium to the Middle Eastern benchmark -- averaged minus $3.08/b in April, marking the lowest ever monthly average spread, Platts data showed. The spread averaged 15 cents/b to date in September, but that's significantly lower than $2.38/b average in 2019.

New, unusual trade flows

One of the unusual trade flows that raised many eyebrows in the Asian trading community was a few Far East Russian Sakhalin Blend crude cargoes moving to San Francisco in the US, rather than serving traditional Northeast Asian buyers such as China, South Korea and Japan.

"Sakhalin moving into San Fransisco... [such trade flows] you just won't see in the normal market," Grasso pointed out.

Typically, at least 90% of the Far East Russian crude monthly programs that include light sweet Sokol and Sakhalin Blend, as well as medium sweet ESPO Blend crude are absorbed by refiners in the Northeast Asian countries, with rest of the cargoes feeding other end-users across East Asia and South Asia.

However, the sharp plunge in Brent-Dubai spread earlier in the year made many crude grades that are priced on Dubai basis appear very expensive, discouraging some of the regular Far East Russian crude buyers to shun purchases, according to trading managers at GS Caltex, PetroChina and Mitsui.

Sakhalin Blend, Sokol and ESPO are traded on Platts Dubai basis in the Asian spot market.

Grasso also highlighted that even though most of the Persian Gulf crude grades are baseload diet for Asian refiners, a lot of Abu Dhabi cargoes have been forced to find new outlet in the Mediterranean market.

Due to the Asian buyers' tepid demand for several Dubai-linked grades amid narrow Brent-Dubai spread, some of the Persian Gulf grades had to look for "new homes in the distressed market," he said.

Click here for more Platts APPEC News and Insights