Middle East Crude Premium Slumps to 4-Year Low

Recent weeks have seen a significant increase in crude oil exports from the Middle East, putting downward pressure on the Oman-Dubai crude differential, a key indicator of regional market strength. This premium, which reached a peak of $65 in March due to disruptions in the Strait of Hormuz, has now fallen to its lowest level since late July. The decline follows a period of heightened supply as Middle Eastern producers have ramped up shuttle-shipping through the Strait of Hormuz and ship-to-ship transfers in the Gulf of Oman. These measures have helped restore oil flows to near-pre-war levels, according to tanker-tracking services. However, the increased movement of crude has also led to a surge in freight costs, with shipping rates hitting record highs due to a shortage of tankers. The situation is further complicated by the fact that supertankers are being tied up for weeks waiting for ship-to-ship transfers, limiting the availability of very large crude carriers for other critical trade routes.