Qatar issues five-cargo Al Shaheen tender, premiums seen slumping

Quantum Commodity Intelligence – QatarEnergy has issued a sell tender for its keenly-watched Al Shaheen grade, with premiums for the Middle East medium sour crude expected to be sharply lower for January-loading barrels versus December cargoes.

Qatar is offering five cargoes of its flagship crude grade, above the standard three cargoes usually sold, indicating that the state firm has termed out fewer barrels in Q1 2025 and will sell more spot crude.

The tender includes two cargoes for first-decade loading, one mid-month and two more at the backend of the month, each of 500,000 barrels. Tender winners will be notified Thursday.

Based on current indications for medium sour grades, sources said Al Shaheen was valued at Dubai swaps +$0.55-$0.80/b, depending on loading dates.

This challenges the lowest premiums of 2024, which came in August when Qatar awarded October-loading cargoes at Dubai swaps +$0.65-0.90/b.

In October, Qatar awarded three cargoes via tender, including a stem loading the first week of December at around Dubai swaps +$1.95/b, while two late-month cargoes were heard at close to +$1.55/b.

Prices had initially recovered from the Q3 lows when the August tender was awarded at sub-$1/b premiums, but persistently sluggish refining margins accompanied by weak spot demand have seen differentials tumble again.

Structure

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 January, March is the trading month for Dubai.

The M1/M3 (Jan25/Mar25) Dubai cash spread has been valued at well below +$1/b over the past week, according to Quantum data, indicating a steep drop in premiums from last month.

The regular monthly tender from Qatar is seen as a bellwether for the Middle East medium-sour crude market, as the grade is a component of the Dubai' basket' of crudes, regularly setting the price of Dubai as the lowest of the five deliverable grades into the pricing mechanism.

Al Shaheen is also seen as a directional guide for Saudi Aramco's Arab Light OSP, which was priced at Platts Dubai/GME Oman +$1.70/b for December, down from +$2.20/b on November-loading cargoes.

Earlier this year, QatarEnergy announced several engineering contracts to boost production at the offshore Al Shaheen oil field by 100,000 bpd.

The $6 billion worth of deals will boost Al Shaheen production to over 400,000 bpd by 2027 in the North Oil Company, a joint venture between QatarEnergy (70%) and TotalEnergies (30%).

Qatar currently produces around 600,000 bpd of crude oil, of which around half is Al Shaheen, with Qatar Marine and Land making up the balance.