Middle Eastern Oil Prices Surge as Flow of Heavy Crude Tightens
(Bloomberg) -- Oil prices in the Middle East are surging relative to global benchmark Brent crude, as supply of medium-to-heavy grades continue to dwindle from the world’s top producing regions across the world.
Swaps for the Dubai crude marker have risen this week, and are now at the narrowest discount in 18 months to the Brent futures contract in London. That’s because supply disruptions and planned output cuts -- in Saudi Arabia, Iran, Canada and Venezuela -- are happening disproportionately in areas that produce heavier and more sour crudes.
For more information on Iran’s oil output, click here.
While such grades have historically been much cheaper than light-sweet crude from the U.S. and Africa, those dynamics are now reversing due to factors such as record-high shale oil output and a swelling gasoline glut. That’s contributing to a crunch for global processors seeking these low-quality varieties, even as more competition is set to emerge from new refineries across Asia that are designed to handle this type of oil.
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