Qatar Al Shaheen premiums at 20-month lows, further cuts seen to Saudi OSPs

Quantum Commodity Intelligence - QatarEnergy has awarded its monthly Al Shaheen tender for February at the lowest levels since the summer of 2021, reflecting the broader weakness across Asian crude markets this month.

The state-owned firm was heard to have awarded three cargoes of the medium sour grade at premiums of $1.40-$1.50/b to the underlying Dubai swap compared to last month when the grade went at premiums of around+$2.80/b versus Dubai swaps for January-lifting barrels.

These were the lowest premiums since June of 2021, according to Quantum records.

The lower premiums are largely a function of the market structure, as Al Shaheen prices during the month of loading, so it includes two months of backwardation – hence during the loading month of February, April is the trading month for Dubai.

So far in December, the M1/M3 (Feb23/Apr23) Dubai cash spread has averaged $1.26/b, flagging further OSP cuts for Middle East crude grades, although the spread recovered from yearly lows of around $1/b last week to $1.70/b on Friday. 

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 price of Dubai as the lowest of the five deliverable grades into the pricing mechanism.

The tender award puts Al Shaheen at around parity with Upper Zakum, which has been setting the Dubai assessment this month as the lowest of the five grades, which also includes Dubai, Oman and Murban.

It is also seen as a guide for Saudi Aramco's flagship Arab Light OSP, which traders said is likely to be reduced by at least $1/b for February exports to Asia from the current Platts Dubai/DME Oman +$3.25/b for loading next month.