Asian Oil Buying Spree Sends Dubai Crude Toward $100
Key Takeaways
- •Strong buying from China, India, South Korea, and Japan has pushed Dubai crude futures close to $100 per barrel.
- •Saudi Arabia's oil exports have fallen to their lowest level since 2017, according to Kpler and Vortexa ship-tracking data.
- •Strait of Hormuz oil flows averaged only 6-8 million barrels per day over the past week, versus roughly 20 million normally.
- •Asian refiners are diversifying supplies, increasing purchases from Brazil, Canada, Argentina, and Russia.
- •Brent and WTI prices dipped as traders anticipated a possible extension of the pause in US-Iran mutual strikes.
Stronger appetite for Middle Eastern crude grades from China and India has added upward pressure on prices for these grades, pushing Dubai futures close to $100 per barrel, Bloomberg reported, citing unnamed traders.
Demand for Middle Eastern oil is especially strong from refining majors such as Indian Oil Corp. and PetroChina, as well as refiners in South Korea and Japan, the report said. Asia is the largest outlet for Middle Eastern producers, and Dubai serves as the pricing benchmark for most crude sold into the region, which is why physical buying of this scale feeds directly into futures levels. The buying comes despite the latest escalation between the United States and Iran, with Saudi Arabia's oil exports dropping to their lowest level since 2017, according to data from ship-trackers including Kpler and Vortexa.
A further price rally may well be on the table, as some cargoes face delays from August into September and October, Bloomberg also noted. At the time of writing, Murban futures, the UAE benchmark, were trading at $106.10 per barrel, and DME Oman, the Middle East sour crude benchmark for Asia, was trading at $99.18 per barrel.
The stronger demand persists despite depressed flows of oil via the Strait of Hormuz, where the average daily volume over the past week stood at between 6 and 8 million barrels — well below the roughly 20 million barrels per day that normally transits the chokepoint, the route through which about a fifth of globally traded oil typically passes.
Asian buyers are also stepping up purchases from other regions, notably Brazil, Canada, and Argentina, while China and India are buying more Russian crude. The diversification reflects a broader trend among Asian refiners to widen their slate of suppliers as supply from their traditional Middle Eastern sources becomes scarcer and more expensive.
While Middle Eastern oil prices rise, Brent crude and West Texas Intermediate dipped yesterday, reflecting uncertainty about developments in the Middle East even as mutual strikes between the United States and Iran continue. According to some analysts, the dip came in response to a pause in the strikes, and it appears traders believe the pause could extend — despite a statement by President Trump that "It was a very heavy attack last night, and we're prepared to do another one any time we want."
By Irina Slav for Oilprice.com
