October Pricing Analysis - Asia & Middle East Crude

Summary

Outright Dubai partials weakened by US$2.88/b month-on-month to an average of US$110.73/b in October. Expectations of a lull in Iran-US military action ahead of the 3 November midterms and the 9 October Trump-Putin diesel deal outweighed attacks both on Saudi infrastructure by Yemen’s Ansar Allah group and on Hormuz shipping by Iran. The physical prompt prices eased, with the Dubai M1/M3 average narrowing US$13.39/b from a five-month high to US$8.11/b as attacks on oil facilities freed up crude for export and Chinese refiners cut runs on weak margins. Murban full cargoes narrowed to a US$0.36/b premium over Dubai M1 from US$1.15/b, and the Brent-Dubai EFS fell US$4.899/b to US$4.95/b, as a Basrah glut drew Indian buyers to Mideast crude. In the Dubai partials market, Trafigura bought 86.6% of partials and 23 of 24 convergences, while Unipec sold 34.3% of the total, down from nearly all of it in September. Instead of narrowing like the Dubai physical curve, the swaps curve widened, with M1–M12 backwardation widening by about US$8.49/b. Post-election Iran-US developments will determine whether that deferred premium will continue to hold.

Market activity

• Trafigura bought 528 of the 610 partials traded in October (86.6%). ExxonMobil bought 58, and BP and Phillips 66 bought seven each.
• In contrast, September buying was split between Total (132), Trafigura (92) and ExxonMobil (89), instead of being concentrated in one major buyer.
• Sellers were more diversified - Unipec, the trading arm of state refiner Sinopec, sold 209 partials (34.3%), down from 400 of 407 in September. Intermediaries Glencore (92), Mercuria (84), Vitol (63), Mitsui (53), Gunvor (16) and Centalion (4) sold 312, and oil majors BP (81), Phillips 66 (7) and Chevron (1) sold 89.
• A total of 24 convergences were observed: 17 Oman and seven Murban, of which Trafigura bought 23. Trafigura’s sustained buying in the window lent support to Dubai while it was also selling spot cargoes, which typically price against Dubai, so a firmer benchmark lifted the value of its physical sales.

Price action

• Dubai partials averaged US$110.732/b, down 2.5% from September’s US$113.616/b. Year-on-year they were up US$45.733/b (+70.4%) from US$64.999/b in October 2025.
• Open US$107.195/b (1 Oct), low US$105.69/b (6 Oct), close and monthly high US$118.70/b (30 Oct). The US$13.01/b range was less than half September’s US$28.09/b.
• The largest daily gain was +US$4.77/b on 8 October, followed by +US$4.50/b on 30 October. Prices fell US$2.20/b to US$108.50/b on 9 October, the day of the diesel deal.

Cross-market dynamics

• Murban full cargoes averaged a US$0.363/b premium to Dubai M1, against US$1.154/b in September. The differential moved between -US$0.095/b (2 and 5 Oct) and +US$0.44/b and held at +US$0.44/b from 7 to 30 October. Its September range was -US$4.90/b to +US$5.02/b, so the light-sour premium both narrowed and stopped moving.
• GME Oman averaged a US$0.277/b discount to Dubai M1, against a US$0.451/b premium in September. Oman, the grade behind 17 of the 24 convergences, priced below Dubai for most of the month.
• Weaker margins pushed Chinese independent refiners to cut run rates earlier in the month, and state-owned PetroChina and Sinopec were also expected to reduce November runs. Lower Chinese buying cut the pull on medium-sour barrels and added to the supply weighing on prompt Dubai structure.

Cross-regional dynamics

• The Brent-Dubai EFS averaged US$4.952/b, down US$4.899/b from September’s US$9.851/b. It touched a low of US$3.15/b on 15 October, peaked at US$7.59/b on 27 October and closed at US$5.39/b on 30 October.
• A narrower EFS normally makes Brent-linked crudes more competitive in Asia, but arbitrage flows stayed limited, as seen in thin spot interest for WTI into Asia. Rising freight costs absorbed the EFS gain and delivered Mideast cargoes landed in Asia much cheaper than arbitrage grades.
• Mideast prices fell further against Dubai, widening that delivered advantage:
  • ADNOC’s 11th tender awarded about 20mn bbl for December loading on an STS/FOB Fujairah basis. Upper Zakum sold at discounts of US$4.00–6.00/b to December Dubai and Das Blend at a US$0.50/b discount to flat, against premiums of up to US$7.00/b in the previous tender.
  • A glut of Basrah crude weakened its spot differentials, drawing Asian refiners, particularly in India, to Mideast crude over arbitrage grades.

Curve structure

• Deepening backwardation: Dubai swaps M1–M12 backwardation widened by US$8.486/b, from US$15.891/b on 1 October to US$24.377/b on 30 October. M1–M6 widened by US$4.468/b to US$14.485/b, while M1–M2 narrowed by US$0.290/b to US$3.390/b, so the steepening came from the deferred end of the curve rather than the prompt.
• The move sat beyond the prompt. M1–M2 narrowed US$0.29/b while M1–M6 and M1–M12 widened, so the market priced tightness into 1Q27 and beyond rather than into the nearest swap month.
• This contrasted with the physical prompt, where the partials M1/M3 averaged US$8.108/b against September’s five-month high of US$21.501/b. Easing in the physical prompt did not carry into the swaps curve, and the cost of hedging deferred positions rose.

Price volatility

• October’s coefficient of variation (CV) was 56% below September’s 7.94% and the lowest since May’s 3.50%.
• Volatility fell because the risk was steady rather than sudden. Through October the market consistently priced in Ansar Allah attacks on Saudi Arabia, then uncertainty over Iran-US ceasefire progress ahead of the mid-terms, rather than reacting to one-off shocks. That kept partials in a US$13.01/b range, less than half September’s US$28.09/b.

Something to watch

• Look out for the outcome of the US midterm elections. Trump’s victory and no potential ceasefire deal in the Middle East could lead to the restart of military strikes. This would rebuild the prompt premium, while a ceasefire would extend the export recovery that narrowed the partials M1/M3 average to US$8.108/b. Watch for a move in Dubai M1/M3.
• Chinese buying amid refinery run cuts: Independent refiners have cut runs on weak margins, with PetroChina and Sinopec also expected to reduce runs in November. Lower Chinese demand would leave more medium-sour crude unsold, keeping Oman prices below Dubai and Unipec with barrels to sell. Watch the November Oman-Dubai spread and Unipec’s partials selling activity.