MIDDLE EAST OIL PRICES RISE TO RECORD HIGHS ON ANTI-RUSSIAN SANCTIONS

The spread between Brent and Dubai crude on the ICE Futures Europe exchange has hit its widest level since 2015, with the latter usually selling at a discount but now more than $2 above the benchmark.

Oil prices from the Middle East have surged to record highs on tightening sanctions against the Russian oil industry as importers such as China and India look to quickly replace previous purchases, Bloomberg reports.

Thus, the publication notes, the spread (the spread between the best prices in the buy and sell offers) between the Brent and Dubai oil brands on the ICE Futures Europe exchange has increased to its largest value since 2015. The price of Dubai crude has exceeded the price of Brent by more than $2, although three months ago it was given a discount of $1.43 to the standard.

Typically, UAE oil is sold at a discount to the benchmark because it costs buyers more to refine it into finished products such as gasoline and diesel, Bloomberg notes. However, excitement among importers from India and China has caused a sharp increase in prices, the agency writes.

On January 10, the United States introduced the “most significant” sanctions ever against the Russian energy sector. The list of sanctions includes two of the four largest Russian oil producers (Gazprom Neft and Surgutneftegaz), dozens of oil services companies and traders from around the world who trade Russian oil. More than 180 oil tankers (as well as oil tankers, an icebreaker, supply vessels and several LNG tankers) have also been sanctioned, which US authorities consider part of Russia’s “shadow fleet.”

The US has separately banned the provision of “oil services” to anyone in Russia. These include, among other things, services related to exploration, drilling, well completion, oil refining, storage, marketing of oil and oil products, as well as services related to natural gas as a by-product of oil production.

This part of the restrictions will come into force on February 27. India’s Deputy Minister of Petroleum and Natural Gas Pankaj Jain confirmed that the US has requested that Russian oil be loaded from sanctioned tankers by that date. At the same time, India has expressed its willingness to continue buying Russian oil if it is sold at a price below the $60 per barrel set by Western countries and without the participation of sanctioned Russian companies and ships.

China's crude oil imports from Russia in 2024 have set a record. Bloomberg wrote that Chinese oil companies have decided to urgently buy fuel from the Middle East, Africa and America due to the expectation of supply disruptions after the introduction of new anti-Russian sanctions.