GX is closely monitoring the impact of the ongoing Middle East conflict on our indexes and benchmarks. While no major methodology changes have been required to date, the duration of the conflict isa critical variable. A prolonged disruption to physical trade activity would directly affect our ability to assess key benchmarks and the indexes derived from them.
Middle East Crude Benchmarks
Our Middle East crude indexes are underpinned by three physically delivered benchmarks - Dubai, Oman, and IFAD Murban - which collectively form the basis of physical spot and term pricing for crude exports from the region.
The GX Dubai assessment is based on a basket of five regional grades (Dubai, Oman, Upper Zakum, Al-Shaheen and Murban). Currently production three out of the five grades (Dubai, Upper Zakum and Al Shaheen) plus a portion of Murban loading from Jebel Dhanna is locked inside the Strait of Hormuz.
So far only Murban (loading at Fujairah) andOman (loading at Mina al Fahal) load outside the Strait of Hormuz and remain operational. However, both face material risk:
- Murban / Fujairah: ADNOC has had to intermittently halt loading operations at Fujairah in recent days due to attacks on nearby storage facilities. The company has also restricted liftings from Fujairah, requiring equity partners to lift from within the Middle East Gulf, effectively limiting access to equity entitlements.
- Oman / Mina al Fahal: Loadings remain normal at present but were briefly paused after an attack on storage tanks at Duqm. Oman crude exports are around 800,000 b/d and could be curtailed at short notice.
The market is currently trading May-loading cargoes. If physical activity remains disrupted for a further two to three weeks, it is unlikely that participants will take on the risk of tradingJune-loading barrels, which would materially reduce the trade flow underpinning these three benchmarks and all related indexes.
Middle East LPG & Oil Products
A similar disruption risk applies to our the GX Middle East LPG assessment, where almost all of the LPG production from the Middle East is trapped inside the Strait of Hormuz since the attack on Iran began. There are reports that a trickle of VLGC ships carrying Iranian LPG and small number of cargoes destined for Indian have passed through the Strait in recent days, but spot trading of Middle East LPG has been halted and exports from Saudi Aramco’s Red Sea port of Yanbu are currently meeting term commitments.
Our Middle East oil products assessments are also expected to be affected; especially as physical loadings from all Middle East ports including the port of Duqm in the Arabian Sea remains under threat of attacks. GX is expected to maintain assessments for oil products swaps for the Middle East on a netback basis from Singapore, as long as values for associated freight remain available.
Europe Oil Products
Europe imports significant volumes of middle distillates from the Mideast Gulf. The longer the Hormuz blockage goes on, traders will increasingly be looking to alternative origins to meet resupply seaborne cargo requirements. GX will continue to monitor these markets and make adjustments to ensure freight normalisation baskets reflect prevailing trade flows as necessary. For freight derived indexes, GX expects to maintain assessments for these prices, as long as values for all relevant freight routes remain available.
Data Provider Risk
Third-party data providers are reviewing their coverage of Middle East-related markets. In some cases, this may result in a reduction in publication frequency for key freight routes; in a worst-case scenario, certain assessments could be suspended indefinitely. GX is monitoring these developments and will factor any such changes into our methodology decisions.
Estimated Scope of Impact
GX has identified approximately 345 indexes and related forward curves for Middle East Crude and Oil Products and a further 195 indexes and related forward curves for European Middle Distillates that are directly or indirectly exposed to this disruption. These include freight netback and forward curves, official selling price (OSP) calculations, and period averages. Under the current scenario of a temporary shut-in with no defined restoration timeline, GX anticipates short-to medium-term market dislocation, which may require methodology adjustments or the temporary suspension of selected indexes.
GX Response
GX is actively monitoring market activity and will make methodology adjustments as and when required. We are prepared to act - on an index-by-index or group basis - including temporary suspension where trade activity no longer supports robust assessment. Clients will be notified in advance of any such changes in accordance with our standard methodology governance process.
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