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Middle East oil benchmark Dubai rises to multi-year high on Iran sanctions
Middle East crude benchmark Dubai jumped on Monday to the highest premium in more than five years ahead of an expected announcement by Washington to end U.S. sanctions waivers for Iranian oil buyers, according to trade sources and Reuters data.
Stronger Middle East crude benchmark prices pushed up costs of Middle East and Russian crude that account for more than two-thirds of Asia’s imports and squeezed refiners’ margins.
Cash Dubai’s premium to Dubai swaps, was at $1.79 a barrel, the highest since at least 2014, the data showed. DME Oman’s premium to Dubai swaps also touched $1.90 a barrel on Monday, the highest since October.
The United States is expected to announce on Monday that buyers of Iranian oil need to end imports soon or face sanctions, a source familiar with the situation told Reuters, triggering a 3 percent jump in crude prices to their highest for 2019 so far.
Middle East crude prices have started the month strong, boosted by purchases by several companies during a price assessment process by S&P Global Platts, and as Asia’s demand is set to rebound in third quarter when refineries ramp up runs after maintenance.
A total of seven Upper Zakum crude cargoes were purchased by BP, Lukoil, Koch, Gunvor and Total so far this month during Platts window, trade data showed.
Earlier, several grades of Middle East and Russian crude such as al-Shaheen and ESPO Blend have traded at their highest premiums in five to seven months while light sour grades from Abu Dhabi traded at their first premiums in six months.
Buyers will have no choice but to pay more for alternative supplies if the United States decides to stop waivers for Iranian oil buyers, traders said.
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