Qatar awards Al Shaheen tender, grade returns to premium v Dubai
Quantum Commodity Intelligence – QatarEnergy has awarded its monthly Al Shaheen tender for March at positive premiums as the Middle East spot market rebounded this month after trading in late 2023 at the lowest differentials since the 2020 global pandemic.
The state-owned firm was heard to have awarded four cargoes of the medium-sour crude at premiums ranging from +$0.75/+$0.90/b against the underlying Dubai benchmark versus the previous month when February barrels were placed at minus $1/b to -$0.80/b.
Premiums for medium-sour grades had been struggling for most of the fourth quarter but have improved in January as market structure firmed and the risk premium around the Middle East conflict increased.
The latest tender included one early March, two mid-month and one late-month stem, while successful bidders were said to include Shell and Idemitsu, who are regular buyers of Al Shaheen via tender. Trading houses Glencore and Trafigura were rumoured to be the other winners.
The total number of Al-Shaheen cargoes is expected to be 17-18 in March, typically the maximum number available in any given month.
The Al Shaheen OSP for the term cargoes was heard at the higher end of the tender award range, close to Dubai +$0.90/b.
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.
The 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 March, May is the trading month for Dubai.
So far in January, the M1/M3 (Feb24/Apr24) Dubai cash spread had been trading at +$0.80-$1.20/b, according to Quantum data, although the Al Shaheen tender price suggests the spread is narrowing slightly.
Al Shaheen is also seen as a directional guide for Saudi Aramco's Arab Light OSP, which traders said is on course for an increase next month after slashing premiums for the flagship crude on February-loading dates to Platts Dubai/DME Oman +$1.50/b, down from +$3.50/b in January.
QatarEnergy set the OSP for Qatar Marine for February at a discount of -$0.75/b versus Platts Dubai, compared to +$0.90/b in January, while Qatar Land was cut to -$0.75/b from +$0.10/b.
