Qatar's Al Shaheen crude sold at second highest premiums on record

Quantum Commodity Intelligence - QatarEnergy has awarded its monthly Al Shaheen tender for September at the second highest premiums on record, reflecting the underlying strength of the Dubai structure and strong demand for medium sour barrels.

Two cargoes of medium sour grade were sold at premiums to the Dubai September swaps at $9.50-10/b for an early-month cargo and $9-9.50/b for an end-month cargo, an increase of more than $1/b on August cargoes.

The premiums are the second-highest on record after May-loading cargoes were awarded at around Dubai swaps +$12/b during the March tender, coinciding with Russia's invasion of Ukraine and record Dubai backwardation at the time.

The stronger premiums are largely a function of the market structure, as Al Shaheen prices the month of loading, so it includes two months of backwardation – hence during the loading month of September, November is the trading month for Dubai.

The key M1/M3 (Aug22/Oct22) spread, which regional producers closely monitor, was assessed by Quantum at around +$9.70/b on Monday by Quantum, the final submission day for tender bids.

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, often setting the price of Dubai as the lowest of the five deliverable grades into the pricing mechanism.

The tender award puts Al Shaheen at close to parity with Upper Zakum and Oman, which had been setting the Dubai assessment this month as the lowest of the five grades.

Meanwhile, the Qatar Marine tender for September was heard awarded at Dubai swaps +$8.75-9/b.