Qatar's Al Shaheen crude oil premiums hit record of Dubai swaps +$12/b

Quantum Commodity Intelligence - QatarEnergy has awarded its monthly Al Shaheen tender for May at the highest ever premiums to the underlying Dubai benchmark, underpinned by record market backwardation, while buyers scramble for supplies as sanctions tighten against Russia.   

The medium-sour crude was sold at premiums of around $12/b over Dubai swaps, compared to $4.40-$4.50/b last month, which in turn was an all-time high.

The grade is priced as a differential to Dubai during the pricing month, so the premium includes two months of market structure.

Dubai time spreads have rocketed following Russia's invasion of Ukraine, which potentially removes millions of barrels of crude from the market as national and company embargos take hold.

The M1/M3 (May22/Jul22) spread has widened to almost $12/b this week, while M1/M3 Dubai averaged $3.87/b in February, according to Quantum data.

The Al Shaheen tender is closely watched as it acts as a price indicator for the Middle East medium sour crude market and is also 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.

Upper Zakum is currently setting the Dubai assessment as the lowest of the five grades.

Al Shaheen is currently valued at a small premium to Upper Zakum and Oman, which is also a component of the Dubai benchmark.