Crude oil futures are expected to remain volatile as the escalating Russian-Ukraine conflict, along with Iran nuclear deal talks keep market participants on the edge.
At 0200 GMT March 14, front-month May ICE Brent crude futures stood at $109.14/b, down $3.53/b (3.13%) from the March 11 settlement, says a Market Insight published in Platts.
Middle East crude
Spot trade for May-loading Middle East crude is expected to see a further uptick after an early start to monthly spot tenders late last week.
Qatar Energy sold its May-loading Al-Shaheen crude and Qatar Marine crude to Chinese and Indian buyers at premiums of $12/b and $11/b to the Dubai benchmark respectively, in line with the sour complex levels seen so far this month.
India’s crude buying appetite remains strong with Indian Oil Corp. heard to have bought Russian Urals crude on a delivered basis for May arrival apart from Middle East and West African last week. Traders will watch the country’s demand for Russian grades which could help soften the ongoing tightness in the Middle East crude market.
Eyes are on trades for Russian ESPO Blend crude with expectations of weak buying interest leading to the grade likely to be offered at sharp discounts. Tenders for the crude are expected early in the March 14-18 week.
Dubai cash/futures (M1/M3) averaged $11.91/b in the week ended March 11, against $9.82/b in the week ended March 4.
Intermonth spreads were narrower during mid-morning trade March 14 with May/June pegged at $2.50/b, down 9 cents/b from the Asia close March 11.
May Brent/Dubai Exchange of Futures for Swaps was pegged at $11.20/b at mid-morning March 14, down from $12.14/b at the Asia close March 11.
Asia-Pacific crude
Market participants await trading activities for May-loading barrels of Australia’s North West Shelf condensate, while keeping a close watch on movements for the overhang condensate barrels from the April-loading cycle.
On Qatari condensates, more clarity on tender results for May-loading barrels of Qatar’s LSC may emerge in the current week.
Trading activities across the light sweet crude complex, in particular Kutubu Blend and Ichthys Field Condensate, are expected to emerge in the week.
On regional sweet crudes, traders will be looking out for the May-loading program for Malaysia’s Kimanis crude and more tender activities from Vietnam’s PV Oil in the week.
Market participants anticipate trade details for Sudan/South Sudan’s heavy sweet Dar Blend, where cash premiums could edge higher amid stronger LSFO cracks.
Clarity on trade details for April-loading barrels of Australia’s heavy sweet Vincent crude could also emerge this week.
Delivered crude
Arbitrage flow of US’ WTI Midland crude into Asia may be thin as economics have become unattractive for some Asian buyers, in view of rising cash premiums.
Market participants will be on the lookout for fresh trades on June arrival barrels Brazil’s Tupi crude, as sentiment remained strong due to supportive Western demand.
Crude futures
Oil prices came close to the $140/b mark during the week ended March 11 as the US and UK banned Russian oil exports.
The May contract for ICE Brent futures fell 5.44% on the week at $112.67/b at the Asian close on March 11, while the April contract for NYMEX light sweet crude was 6.35% lower at $109.33/b.
The US banned Russian energy products imports and the UK will phase out Russian crude imports by the end of 2022.
The US imported 473,000 b/d of Russian refined products and 199,000 b/d of Russian crude in 2021, according to the EIA.
Russia was the largest importer of UK’s diesel in 2020 at 3.6 million mt, or 34% of total diesel imports, according to the government data.
Inness estimated Russian crude exports have already fallen by 1.6 million-2 million b/d this month, as a result of existing sanctions on Moscow and as the market voluntarily suspends purchases. Rotterdam Urals discount to Dated Brent remained stable for the week, assessed at a record low $27.90/b discount on March 11.
Iranian deal stalled on Russia’s demand for unhindered trade Tehran. Full sanctions relief by May could lift Iranian production by 750,000 b/d by August, plus allow about 300,000 b/d of exports from storage. Within a year, some 1.5 million b/d of Iranian oil exports could return to the market.
Russia is looking to boost its oil exports to India and rest of Asia after a dramatic decline in interest for its oil among Western consumers.
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Source: Platts
