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Brent crude drops in price against Dubai

Brent crude drops in price against Dubai

Brent crude futures flipped into a discount versus Dubai swaps Wednesday for the first time in November 2023. LSEG data revealed this, highlighting the strength of Middle East sour crude compared to the global benchmark sweet crude.

Brent-Dubai Exchange of Futures for Swaps LSEG data revealed that the price of oil was minus 2 cents per barrel as of Wednesday's close on the market at 0430 GMT.

Two trade sources reported that the discount had since increased to 14 cents per barrel. Sweet oil is usually more expensive because it's easier to process.

Harry Tchilligurian is the head of research for Onyx Capital. He said, "We saw lots of bid activity recently in the Dubai window from trade houses which supports the Middle East Benchmark."

Brent, on the contrary, is drawing less attention as refiners are still in Europe undergoing maintenance, and margins for refining in Northwest Europe have been subdued."

Brent crude futures were also under pressure Wednesday, after Russia agreed with U.S. president Donald Trump's suggestion that Moscow and Kyiv temporarily cease attacking each other’s energy infrastructure. This could pave the path for Russian oil entering global markets.

Another trader stated that Brent's weakening against Dubai has created arbitrage opportunities to send sweet crude from the Atlantic Basin towards Asia.

He added that the price spreads between Brent and Dubai for contracts from April to June are also discounted. (Reporting and editing by Andrew Heavens, Louise Heavens, and Florence Tan)

(source: Reuters)