September Pricing Analysis - Asia & Middle East Crude

SUMMARY

Dubai crude rallied $24.76/b (+27.9%) month-on-month to average $113.62/b in September, driven by a renewed exchange of attacks between Iran and the US early in the month. The 'Ansar Allah' group seized Mokha port near the Bab al-Mandeb Strait and attacked Saudi Arabia's East-West pipeline. After a mid-month spike to $128.00/b (16 Sep), an almost six-month high, the market eased through the second half, closing at $106.19/b (30 Sep). The curve confirmed prompt tightening: Dubai M1/M3 backwardation widened from $9.965/b to $19.977/b, and its monthly average was a five-month high. The Brent-Dubai EFS widened to a $9.85/b average, keeping Dubai-linked grades competitive in Asia, with strong Indian buying of Basrah grades. Escalating attacks on energy facilities and tankers in the Red Sea and the Strait of Hormuz heightened supply risk and front-end tightness in the curve.

MARKET ACTIVITY

• Unipec (Sinopec's trading arm) sold 400 of 407 trades (98.3%) in the final November-loading partials tally, up from 83.5% in August, with BP the only other seller (7, 1.7%). This was consistent with sellers offloading term cargoes rather than weaker Chinese demand, as Chinese refiners continued to buy Saudi crude in the spot market.
• Trading houses and majors absorbed it: Total bought 132 trades (32.4%), Trafigura 92 (22.6%) and ExxonMobil 89 (21.9%), reflecting relative-value positioning, with August's dominant buyer Mercuria absent from the tally.
• PetroChina flipped from August's second-largest seller to a buyer (25 trades).

PRICE ACTION

• Dubai FOB Partials averaged $113.62/b in September vs August's $88.85/b, +$24.77/b (+27.9%) month-on-month. The rise tracked renewed Iran-US attacks and the 'Ansar Allah' group's advance on the Red Sea coast, which heightened supply risk in the Red Sea.
• Weekly walk: W1 $101.60/b; W2 $116.04/b (+14.2% WoW); W3 $124.88/b (+7.6% WoW); W4 $113.04/b (-9.5% WoW); W5 (28–30 Sep) $107.80/b (-4.6% WoW), as the second-half pullback unwound most of the mid-month rally.
  • The largest single-session move was +$12.30/b on 9 September, from $109.71/b to $122.01/b.
• The month printed a high of $128.00/b (16 Sep), a low of $99.91/b (1 Sep), and closed at $106.19/b (30 Sep), an intra-month range of $28.09/b vs August's $20.46/b.

CROSS-MARKET DYNAMICS

• IFAD Murban averaged a $2.11/b premium to Dubai in September but swung sharply within the month: from a $4.90/b discount on 9 Sep, when Dubai surged, to a $12.09/b premium on 29 Sep, easing to $8.55/b by 30 Sep. The swing was likely driven by lower liquidity on the exchange, as IFAD Murban futures are not used to set ADNOC's November OSP.
• GME Oman flipped to an average premium of $0.45/b over Dubai from a $1.01/b discount in August, peaking at $6.82/b on 8 Sep, though the month-end print returned to a $0.40/b discount (30 Sep).

CROSS-REGIONAL DYNAMICS

• The EFS averaged $9.85/b in September vs August's $9.05/b, opening at $8.23/b (1 Sep) and closing at $9.50/b (30 Sep), a $1.27/b intra-month widening with a peak of $11.78/b (14 Sep).
• September's $8.23-11.78/b range was narrower than August's $5.62-10.93/b band. The re-widening from August's $5.62/b close reversed the month-end compression, keeping Atlantic Basin barrels uncompetitive in Asia.
• That pricing drew Indian buyers to Middle East barrels, though the demand pull was not strong enough to narrow the spread.
  • State-run and private Indian refiners bought October-loading Basrah on an FOB basis at discounts of around $17.00/b for Basrah Medium and $27.00/b for Basrah Heavy against October Dubai; indicating prices were attractive enough for them to take on the higher risk of loading Basrah cargoes from inside the Gulf.

CURVE STRUCTURE

• Dubai Swaps M1 gained $10.41/b (88.21 to 98.62) over September vs M12's $6.56/b (74.81 to 81.37), the front rallying 1.6x stronger than the back.
• M1-M2 widened from +$5.82/b to +$14.99/b while M1-M6 moved only from +$10.55/b to +$11.49/b. Dubai M1/M3 backwardation widened from $9.965/b to $19.977/b, its monthly average ($17.61/b) at a five-month high, driven by attacks from Yemen on Saudi energy facilities.
  • Should Red Sea supply risk ease, the prompt-concentrated widening would be the first to unwind, with M1-M2 the spread to watch.

PRICE VOLATILITY

• September's CV came in at 7.94%, up from August's 6.80% but below July's 11.88% and June's 13.87%, even as the flat price averaged its highest level of the six months ($113.62/b).
• The modest CV alongside a $28.09/b range pointed to a single rally-and-retrace arc rather than a broad two-way regime, with the month's stress expressed in the prompt spread rather than flat-price dispersion.

SOMETHING TO WATCH

• SOMO's new Basrah tender offered Basrah Medium at wide discounts of $34.00/b and Basrah Heavy at $37.00/b against market destination benchmarks on an FOB Basrah basis. Watch for more Indian buying of Basrah grades from inside the Strait of Hormuz.
• Continue to watch activity in the Red Sea and the Strait of Hormuz, given the recent increase in attacks on energy facilities and tankers.

Note: All figures, prices and market activity referenced in this report are based on the period covered by this monthly update.