Qatar's Al Shaheen crude sold at sharply higher levels as Dubai structure widens

Quantum Commodity Intelligence - QatarEnergy has awarded its monthly Al Shaheen tender for August at sharply higher premiums to the Dubai benchmark compared to the previous month, reflecting the underlying strength of the Dubai structure and firm demand for medium sour barrels.

Two cargoes of medium sour grade were sold at premiums to the Dubai August Dubai swaps of over $8.50/b for an early-August cargo and above $8/b for an end-month cargo.

The premiums are the second-highest on record after May-loading cargoes were awarded at around Dubai swaps +$12/b during the March tender.

Last month, Al Shaheen for July was sold at an average of around $6/b to the July Dubai swap.

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

The key M1/M3 (Aug22/Oct22) spread, which is closely monitored by regional producers, was assessed at +$7.52/b on Friday by Quantum, compared to around +$5.50/b at the same stage last month.

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.

This month, Upper Zakum has been setting the Dubai assessment as the lowest of the five grades.

Meanwhile, the Qatar Land tender for August was awarded at Dubai swaps +$8.50-9/b, while Qatar Marine was heard at above Dubai swaps +$6/b.