Qatar awards Al Shaheen crude tender at highest premiums of 2023
Quantum Commodity Intelligence – QatarEnergy has awarded its monthly Al Shaheen tender for December loading at the highest premiums of the year despite bids coming in at the lower end of expectations.
The state-owned firm was heard to have awarded three cargoes of the medium-sour crude at premiums ranging from +$2.70/b to +$3.30/b versus the underlying Dubai swap - the latter number the highest premium paid for the medium-sour Middle East grade this year.
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 premium for the early-month cargo was the highest since last December when January-loading cargoes were awarded in excess of +$4/b.
The tender included one cargo for each decade of the month, while successful bidders were said to include Mitsui, Petronas and Exxon.
The total number of Al-Shaheen cargoes is expected at 17 in December, rebounding from a scheduled 13 in November, which coincides with maintenance on the offshore field.
Last month, the state-owned firm awarded three cargoes of the medium sour grade at premiums ranging from +$2.20/b to +$2.75/b for November, whereas prices had dipped to around +$1/b over the summer.
However, premiums have broadly improved after Saudi Arabia extended its voluntary 1 million bpd cut until the end of the year, while Russia has also trimmed exports by 300,000 bpd.
Al Shaheen is priced during the month of loading, so it includes two months of backwardation – hence during the loading month of December, February is the trading month for Dubai.
Structure
The M1/M3 (Dec23/Feb24) Dubai cash spread was initially trading comfortably above $3/b in the early part of October, according to Quantum data, but has subsequently dipped back to around $2.50/b this week, which in turn narrowed values for medium sour grades.
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 the same value as Oman, which up until Thursday had been setting the Dubai assessment so far this month as part of the 'Dubai basket' of crudes that also includes Dubai and Murban.
It is also seen as a guide for Saudi Aramco's flagship Arab Light OSP, which traders said could lead to December-loading cargoes coming in relatively similar to the current Platts Dubai/DME Oman +$4/b.
Meanwhile, Qatar Marine was heard awarded at around Dubai +$2.35/b and Qatar Land at close to Dubai +$3/b.
