Brent/Dubai EFS hits fresh 2-yr high on renewed North Sea strength

London (Quantum Commodity Intelligence) – The Brent/Dubai EFS (exchange of futures for swap), a key metric in comparing Dubai-related crude oil against grades pricing against the North Sea Brent benchmark, hit a fresh two-year high Thursday as rising Brent outpaces the Middle East benchmark.

The August EFS was assessed by Quantum on Thursday at $3.76/b, compared to around $3.40/b earlier in the week and $2.90/b on the July EFS at the end of May, having strengthened by around $0.35/b in the last two days.

The spread reflects North Sea light sweet crude against medium sour crude in Asia, and is also a measure of the west/east spread.  

A wider spread typically makes Middle East crude and other grades pricing against Dubai (or Dubai/Oman) more attractive to Asian refiners, while Dated-Brent related crudes, such as those from the North Sea or West Africa, become more expensive.

Likewise, the Brent/Dubai cash has widened by $0.45/b in the last two days, bucking the June trend of a narrowing spread.

Quantum assessed August Brent/Dubai cash at $1.75/b on Thursday, although in late May the spread was above $2.00/b.

While the cash spread is a like-for-like comparison of the same loading month, the EFS includes two months of backwardation -- so the current August EFS measures August-loading Brent versus October-loading Dubai.

This week the Aug/Oct Dubai spread widened out to more than $2/b for the first time since January of last year.

The front-month ICE Brent spread has doubled in the last 10 days from around +0.40/b to +$0.80/b, the widest spread since January 2020 outside of expiry-day volatility.

Sentiment on the North Sea market has broadly improved on demand recovery optimism in the second half of the year.