Qatar awards Al Shaheen at lower premiums, flags Saudi OSP cut

Quantum Commodity Intelligence – QatarEnergy has awarded its monthly Al Shaheen tender for January loading at sharply lower premiums versus the previous month, flagging cuts in the next round of Middle East OSPs.

The state-owned firm was heard to have awarded three cargoes of the medium-sour crude at premiums ranging from around +$1.60/b to +$1.75/b versus the underlying Dubai benchmark, on average more than $1/b down on the month.

In the October tender, premiums for the early December cargo were heard at +$3.30/b, while a late-month cargo was heard around +$2.70/b, reflecting the backwardation.

The latest tender included one cargo for each decade of the month, while successful bidders were said to include Exxon, Shell and PetroChina. The January Official Selling Price was set at Dubai +$1.75/b following the tender award, a sharp cut from December's +$3.25/b.

The total number of Al-Shaheen cargoes is expected to be 16 in January, edging down from a scheduled 17 in December.

Spot premiums came under heavy downward pressure in the month-long flat price sell-off during 2H October and 1H November, which coincided with a decline in refining margins, particularly for distillates. 

Bellwether

The Al Shaheen tender is closely watched as it acts as a bellwether for Middle East medium-sour spot crude premiums 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.

However, this month, the Dubai assessment has been set by Murban, with the light-sweet grade valued just below the medium sour grades, which includes Al Shaheen, Oman and Upper Zakum.

The Qatar tender signals a cut in Saudi Aramco's OSPs for January, with Aramco's flagship Arab Light potentially falling at least $0.50/b from the current Platts Dubai/DME Oman +$4/b.

However, no decision will be taken until after the 26 November OPEC+ meeting, with deeper output reductions likely to lead to more modest OSP cuts.

Meanwhile, the M1/M3 (Jan24/Mar24) Dubai cash spread was pegged around +$1.70/b in the early part of this week, which is little changed from last month, so could also point to more modest OSP cuts.