By Siyi Liu and Florence Tan SINGAPORE, March 27 (Reuters) - Spot premium for Dubai crude slumped by more than half to hit its lowest level in three weeks as more sellers emerged and piled on offers
Dubai crude's premium slumps as sellers pile offers on to TotalEnergies
By Florence Tan and Siyi Liu
Dubai Crude Premium Drops Amid Market Volatility
SINGAPORE, March 27 (Reuters) - The spot premium on Dubai crude oil, which has soared since war began in Iran, fell by more than half this week after sellers piled on offers, according to traders and data collated by Reuters on Friday.
TotalEnergies Dominates Middle East Crude Purchases
French major TotalEnergies' trading arm, Totsa, has been the sole buyer of Middle East crude in the Platts window since the start of the month, snapping up 69 Oman and Murban crude cargoes, or 34.5 million barrels, trade data showed.
Dubai Benchmark Premium Plummets
The premium for benchmark Dubai, used to price millions of barrels of crude imported by Asia, ended the week at $23.81 a barrel, the data showed, down 65% on the week.
It hit a three-week low of $17.22 per barrel on Thursday amid severe price volatility due to the U.S.-Israeli war with Iran which has disrupted oil tanker traffic from the Gulf.
Sellers Flood the Market
Sellers such as Unipec, Vitol, Shell and BP started offering Dubai an hour before the trading window opened on Thursday, three sources said.
"They had more than an hour to keep offering (Dubai) down," one of them said.
"Totsa came up but it wasn't even trying to aggressively counter them."
Market on Close (MOC) Process
Market participants submit bids and offers for publication throughout the day until 4:15 pm Singapore time (0815 GMT) during the S&P Global Platts' Market on Close (MOC) process - known as the window - and the process ends at 4:30 pm. These trades feed directly into daily price assessments.
Challenges in Responding to Aggressive Bids
A second trader said the tight timing and price increment rules make it hard for sellers to respond swiftly to an aggressive early bid. Under Platts' methodology, prices can move by a maximum of 5 cents a barrel every five seconds.
Platts' Statement on MOC Process
Platts said in a statement that its MOC process is robust and transparent.
"Platts continues to monitor markets each day to determine whether any changes need to be made to the timing and increments for that day’s MOC based on underlying market volatility," it said in a statement to Reuters.
TotalEnergies' Response
TotalEnergies could not immediately be reached for comment outside office hours. It previously declined to comment on its Dubai trades.
Market Impact and Asian Refiners' Response
Dubai's premium to swaps spiked to an all-time high of about $65 a barrel last week as the amount of crude available for trading fell after S&P Global Platts excluded three of the five Gulf crude grades in the wake of Iran effectively stopping Gulf tanker traffic by closing the Strait of Hormuz.
The price spike has caused Asian refiners to shun spot Middle East crude purchases and to instead seek oil from Europe, Africa and the Americas.
Shift to Alternative Oil Sources
Asian buyers are also beginning to switch to pricing U.S. crude against global benchmark Brent instead of Dubai.
(Reporting by Florence Tan and Siyi Liu; editing by Shri Navaratnam and Jason Neely)
