By Siyi Liu, Florence Tan and Nidhi Verma
SINGAPORE (Reuters) -Spot premiums for Middle East crude rose to their highest in more than two years as strong demand from top importers China and India to replace sanction-hit supplies from Russia and Iran drove up prices, traders said on Thursday.
The Biden administration on Friday announced sweeping sanctions targeting Russian producers and tankers, disrupting supply from the world’s No. 2 producer and tightening ship availability.
That sparked a scramble among buyers in China and India, the world’s top and third-largest importers, for alternative oil supplies and tankers.
In latest trades, QatarEnergy more than doubled its term price for al-Shaheen crude oil loading in March to $3.81 per barrel above Dubai quotes from the previous month, after awarding two cargoes to Totsa at premiums of $3.70-$3.80, trade sources said. Totsa is the trading arm of French major TotalEnergies.
The March term price is at its highest level since October 2022 for cargoes loading in December that year.
The deals came after premiums for Middle East benchmarks rallied this week to above $4 per barrel, with that of Oman and Dubai hitting the highest levels since November 2022. [CRU/M]
“Buyers (are) bidding up to secure supply and avoid operations disruption,” said LSEG analyst Anh Pham.
Indian Oil Corp, the country’s top refiner by capacity, issued its first sour crude tender since March 2022.
The company has also launched a separate tender seeking sweet crude, trade sources said.
In other deals, Unipec bought a March-loading Qatar Marine crude cargo in QatarEnergy’s tender at a premium of just above $3 a barrel to Dubai quotes, 10 times higher than the previous month.
Sinochem bought March-loading Abu Dhabi Upper Zakum cargo from Cepsa, while Indian refiner Hindustan Petroleum Corp bought 1 million barrels Feb-loading Iraqi Basra Medium crude from Litasco at a premium of $1.90 per barrel above Dubai quotes in a purchase tender, trade sources said.
Premiums for light grades have also risen. QatarEnergy sold a March-loading Land crude cargo at a premium of above $2 a barrel above Dubai prices to PTT, traders said. All the Qatar cargoes are of 500,000 barrels each.
The companies typically do not comment on commercial deals.
Prior to Friday’s sanctions on Russian oil, Chinese refiners had already been seeking to replace Iranian supply on concerns that the incoming Trump administration will ramp up embargo measures on Tehran.
Earlier this month, some Chinese buyers had requested more February-loading cargoes from top exporter Saudi Aramco but they did not receive additional supply, three sources familiar with the matter said.
Aramco declined to comment.
The latest round of U.S. sanctions against Russia could significantly disrupt the Russian oil supply chains, the International Energy Agency said on Wednesday, although it held off on factoring the measures into its supply forecasts for now.
(Reporting by Siyi Liu and Florence Tan in Singapore, Nidhi Verma in New Delhi, Olesya Astakhova in Moscow; Editing by Kim Coghill, Subhranshu Sahu, Philippa Fletcher)
