Qatar Al Shaheen crude tender awarded, premiums steady

Quantum Commodity Intelligence – QatarEnergy has awarded its monthly Al Shaheen tender for August loading, with premiums staying around the lowest levels since the early part of 2021.

The state-owned firm was heard to have awarded three cargoes of the medium sour grade at premiums ranging from as low as +$0.80/b versus the underlying Dubai swap for late-month cargoes, to around +$1.05/b for an early-August cargo, reflecting the backwardation.  

Last month, the July tender was awarded at similar levels.

Al Shaheen is priced during the month of loading, so includes two months of backwardation – hence during the loading month of August, October is the trading month for Dubai.

This month the Middle East spot market has been dominated by a surge of activity in the Platts MOC trading window, which so far has seen 38 cargoes delivered via the partials market.

All of the nominations so have been Oman cargoes, which are the lowest valued among the Dubai 'basket' grades, but traders said Upper Zakum or Al Shaheen would likely come into play once the supply of Oman cargoes has been exhausted.

China's Unipec has been the primary seller, as well as trading houses including Vitol, while PetroChina heads the list of buyers, followed by Totsa with cameos from Shell and Trafigura.

Premium

The huge trading volumes helped lift Dubai to a small premium over Brent on Monday, but has had only a modest impact on market structure.    

So far in June, the M1/M3 (Jun23/Aug23) Dubai cash spread has averaged at $0.77/b, an early indication that Middle East OSPs could be in line for a reduction on August-loading cargoes.

The Al Shaheen tender is closely watched as it acts as a bellwether for the Middle East medium-sour crude market and is also a component of the Dubai 'basket' of crudes, often setting the Dubai print as the lowest of the five deliverable grades into the pricing mechanism.

The tender award puts Al Shaheen at around parity with Upper Zakum and at a small premium to Oman, which is setting the Dubai assessment so far this month as part of the 'Dubai basket' of crudes, which also includes Dubai and Murban.

It is also seen as a guide for Saudi Aramco's flagship Arab Light OSP, which traders said will likely see a reduction for August-loading cargoes from the current Platts Dubai/DME Oman +$3/b.