Brent crude futures are trading at a rare discount to Middle Eastern oil, with growing production in Europe and the Mediterranean heaping pressure onto markets for the high-quality oil that underpins the global benchmark.
Brent was 16 cents below Dubai swaps on Thursday, according to data compiled by Bloomberg, the first discount since May 2024. The global benchmark is typically more expensive than denser and more sulfurous Dubai oil because it’s easier to process for oil refiners.
While Middle Eastern oil markets have been generally robust so far this year, those in Europe, the Mediterranean and the wider region touching the Atlantic Ocean have struggled thanks rising supplies from producers at a time where European refining capacity is falling. The spread between Brent and Dubai oil matters to traders because it demonstrates the market’s perception of supply and demand for different quality crudes in different regions.
Near-record flows of crude from Kazakhstan and booming Libyan production have helped to cap prices of light-sweet oil. US exports have also remained robust, and a new stream of crude from Norway is due to come online next month, potentially adding to the discount.
Rising supplies from those markets come at the same time that US President Donald Trump’s tariff policies have heaped pressure on global markets and Brent futures.
Rounds of sanctions, meanwhile, slowed the flow of medium to heavy varieties of Iranian oil, fueling Dubai oil’s bullishness. Tightness in Middle East crude markets makes them one of the last bastions of price strength on the global stage, even as OPEC+ gears up to raise supply starting in April.
Persistently high official selling prices from producers including the UAE are propping up prices of regional oil grades. While key producers cut their most recent official selling prices slightly, that came on the back of some of the largest increases in years.
Energy News Beat