Asian buyers offer big premium for diesel-rich crude from UAE
May-loading shipments have attracted a premium to official selling prices, which are set significantly higher than April
Add BT as a preferred source
[SINGAPORE] Some Asian refiners offered to buy Upper Zakum crude from the United Arab Emirates at around US$20 a barrel above official prices, as processors scramble for medium-sour grades after the Iran war disrupted supply.
The cargoes were for collection by term buyers at the end of last month, said traders familiar with the matter. May-loading shipments have also attracted a premium to official selling prices, which were set significantly higher than April, they added, asking not to be named due to the sensitivity of the matter.
Long-term customers of state producer Abu Dhabi National Oil (Adnoc) typically take their previously agreed volumes every month at official price levels, and do not usually pay a premium. But with flows interrupted by the Middle East conflict, traders are being forced to reprice cargoes to reflect the disruptions.
Adnoc did not immediately respond to a request for comment.
Upper Zakum is a grade that can produce a higher amount of diesel and jet fuel when processed, and is typically loaded from a port at Zirku Island deep within the Persian Gulf. However, the volumes being marketed are from storage sites near Fujairah – outside of the Strait of Hormuz – which were placed there prior to the start of the war in late February, a person familiar said previously.
Adnoc set April official selling prices for Upper Zakum, along with its Das and Umm Lulu grades, at parity to its flagship Murban variety, which was priced at US$69.45 a barrel, according to a list seen by Bloomberg. May-loading crude was also set at parity to Murban, at US$110.75 a barrel.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
Some Asian refiners have made bids for May-loading Upper Zakum at least US$5 a barrel above the official selling price, traders said.
Many Asian refiners are geared towards processing medium-sour crude, and now face having to pay more for alternatives or use different grades that do not yield as much middle distillates such as diesel. The Upper Zakum cargoes are on tankers and can be collected via a ship-to-ship transfer off Fujairah.
Adnoc has maintained the export of Murban through Fujairah, which flows to the port via a pipeline, but shipments of its other grades remain largely disrupted. They come from locations inside the Persian Gulf, including Zirku and Das islands, and need to transit Hormuz to get to global buyers. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
