Brent’s premium to the Middle East’s Dubai benchmark has reached its widest level since 2022, confirming that the global oil market is trading with widespread volatility.
As of Tuesday morning, Brent was trading around $83-$84 per barrel, up more than 7% on the day, while Dubai crude was barely moving near $68. The spread between Brent futures and Dubai swaps – known as exchange-traded futures (EFS) – rose above $6 a barrel, from less than $2 last week before the Iran conflict erupted. That’s the widest gap in years, according to a Bloomberg analysis.
Brent is the international price reference for the world’s marine oil trade, while Dubai serves as a key marker for Middle East crude oil to Asia. When Brent trades at a large premium to Dubai, it signals tightness and risk in Atlantic Basin barrels related to Gulf-bound supplies.
The futures market, where traders buy and sell contracts for oil at a future date, reacts to risk in real time, pricing in potential declines, often before the physical flow is visibly reduced.
Related: How China’s Rare Earth Ban Backfired on US Tech Success
The catalyst is easily identifiable. Tanker traffic through the Strait of Hormuz has been effectively frozen amid Iran’s threats and ongoing military operations. Even if the strait is not officially “closed”, no ship wants to test how many teeth Iran has to increase its threats. With crude from the Gulf and freight rates falling, trading in Middle Eastern benchmarks has become complicated and uncertain.
Brent, meanwhile, attracts a geopolitical premium.
This widening distance is important. If the strait remains inactive for weeks rather than days, upstream dams in the region are increasingly likely. Analysts warn that beyond about three weeks of disruption, manufacturers may have no choice but to halt production.
The market is debating how long the supply risk will last, and whether $100 oil is a floor instead of a ceiling if Hormuz doesn’t normalize.
By Julian Geiger for Oilprice.com
More great reading from Oilprice.com
Oil Price Intelligence brings you signals before they hit front page news. This is the same expert analysis read by experienced traders and political consultants. Get it twice a week for free, and you’ll always know why the market is moving against everyone else.
You get geopolitical intelligence, secret inventory data, and market waves that move billions – and we’ll send you $389 in premium energy intelligence, just for joining. Join 400,000+ readers today. Get instant access by clicking here.
