Middle East crude premiums hit $3 amid sanctions
Middle East crude oil benchmark premiums surged to about $3 per barrel above Dubai quotes, the highest since October 2023, according to trade sources and data.
The jump came as Asian buyers' are rushing to source alternative supplies following tougher sanctions by the US on Russian oil shipments.
The US Treasury imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegaz, as well as 183 vessels that have shipped Russian oil, targeting the revenues Moscow has used to fund its war with Ukraine.
Oil prices extended gains for a third session, with Brent rising above $80 a barrel to its highest in more than four months, as wider US sanctions are expected to affect Russian crude exports to top buyers China and India.
Brent crude futures LCOc1 climbed $1.14, or 1.43%, to $80.90 a barrel by 0741 GMT after hitting an intraday high of $81.49, the highest since Aug. 27.
US West Texas Intermediate crude CLc1 rose $1.20, or 1.57% to $77.77 a barrel after touching a high of $78.39, the most since Oct. 8.
Russian oil exports will be hurt severely by the new sanctions, pushing China and India, the world's top and third-largest oil importers respectively, to source more crude from the Middle East, Africa and the Americas, which will boost prices and shipping costs, traders and analysts said.
Many of the tankers named in the latest sanctions have been used to ship oil to India and China as previous Western sanctions and a price cap imposed by the Group of Seven countries in 2022 shifted trade in Russian oil from Europe to Asia. Some of the ships have also moved oil from Iran, which is also under sanctions.