The recent rally in Brent Crude prices to four year highs resulted in the Middle East sour crude grades also jumping to the highest in four years amid very active trade in the first two days of October, market sources told Platts on Tuesday.
Brent Crude prices hit $85 a barrel on Monday, amid signs that OPEC and friends are not able or not yet willing to fully compensate for the already noticeable drop in Iran's oil exports.
At 09:30 a.m. EDT on Tuesday, Brent Crude was slightly down 0.08 percent at $84.91, while WTI Crude was slightly up and trading above $75 a barrel-up 0.17 percent at $75.43.
The global oil price rally also lifted the prices of the Middle Eastern sour crude complex, with the front-month price for Dubai crude surging $2.15 a barrel in just one day, to $82.95 per barrel at the end of trading hours in Asia on Tuesday, according to Platts data. The cash Dubai price was last higher than Tuesday's at the end of October 2014, data by S&P Global Platts show.
The December Brent/Dubai Exchange Futures for Swaps (EFS) spread-an indicator of the Dubai prices relative to Brent-has been steady this week at $3.54 a barrel, despite the surge in Brent prices, suggesting that the Dubai benchmark has also rallied.
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The significance of the Dubai and Middle East sour grades prices is that all Middle Eastern producers price the oil they sell to Asia-their most-coveted market-against the Dubai and Oman benchmarks.
Traders and market sources are not really sure what to expect from Saudi Aramco with regards to its official selling prices (OSPs) for Asia in November, which the Kingdom is expected to announce soon. One of the key uncertainties is a strange and uncharacteristic volatility in the Oman crude futures in last week's trade, sources and traders told Platts on Monday.
Moreover, Asian buyers are bracing for a tighter market of medium and heavy sour grades as many of them-in South Korea, Japan, and to some extent in India-will not be buying Iran's sour grades as they will be complying with U.S. sanctions on Tehran's oil exports.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More