According to WPB, oil refiners across Asia are actively pursuing increased volumes through term contracts, responding to a surge in spot crude premiums triggered by escalating tensions between Israel and Iran. Market participants report that as geopolitical instability intensifies, the premium for immediate oil deliveries from the Middle East has reached its highest point in several months, exceeding $3 per barrel.
This rise in spot premiums has created a stark contrast with the official selling prices (OSPs) set by Middle Eastern producers for term deliveries, which currently remain comparatively lower. Consequently, many buyers are gravitating toward term contracts to mitigate price volatility and secure more stable supply conditions.
However, trading insiders caution that top producers in the Middle East are unlikely to substantially increase term allocations for the near future, despite the growing demand from Asian clients. Suppliers are reportedly maintaining cautious production strategies amid the uncertain outlook.
Contributing further to the market’s unease, freight rates for oil tankers navigating the Strait of Hormuz have doubled, reflecting heightened risk perceptions among shipping companies. The reluctance to transit this strategic chokepoint stems from fears of further escalation, even though a complete closure of the strait remains a remote scenario at present.
Nevertheless, analysts warn that any interruption to the flow of oil through the Strait of Hormuz—a route that accommodates nearly one-third of global seaborne oil trade—could trigger a dramatic price spike. Projections indicate that sustained disruptions could elevate crude prices to $120 per barrel, while even minor delays might push prices toward the $100 threshold.
Despite widespread concern over potential threats to regional energy exports, particularly from Iran, there is currently no evidence of direct damage to critical oil and LNG infrastructure. Yet, the market remains on edge, closely watching developments that could alter the global energy supply landscape.
By WPB
Oil, Petroleum, War
If the Canadian federal government enforces stringent regulations on emissions starting in 2030, the Canadian petroleum and gas industry could lose $ ...
Following the expiration of the general U.S. license for operations in Venezuela's petroleum industry, up to 50 license applications have been submit ...
Saudi Arabia is planning a multi-billion dollar sale of shares in the state-owned giant Aramco.
