Middle Eastern oil hits $160 as Gulf shipping disruptions deepen

Global oil markets have been thrown into turmoil as prices for Middle Eastern crude on the physical market surged far beyond benchmark levels amid disruptions to shipping in the Persian Gulf.

According to The Wall Street Journal, citing data from Oil Price Information Service (OPIS), physical cargoes of Middle Eastern grades are now trading at more than one and a half times exchange prices. While Brent crude futures hover around $100 per barrel, Dubai and similar grades are being sold for as much as $160.

“The disruption to supplies is so significant that [the market] will enter full panic if the situation is not resolved in the near future,” Helge Andre Martinsen of the Norwegian investment bank DNB Carnegie told The Wall Street Journal.

Since the start of the year, Brent has risen by 72%, while North American WTI crude has gained 53%. In contrast, Dubai crude has surged by more than 150%, reflecting the acute supply constraints affecting Middle Eastern exports.

Analysts warn that if tanker traffic in the region is not restored, exchange-traded prices could rapidly climb to match the elevated levels seen in physical deliveries.

The closure of the Strait of Hormuz has also driven the spread between Brent and WTI to a record $12 per barrel. The relatively lower price of US crude is attributed to the country’s distance from key Asian markets, as well as concerns that exports could be restricted in favour of domestic consumption.

By midday Wednesday, March 25, Brent was trading at $99 per barrel, while WTI stood at $87.7—both more than 5% below Tuesday’s closing levels. Markets are currently trading May futures, with traders pinning hopes for stabilization on that timeframe.

By Tamilla Hasanova