Traders go all-in on Middle Eastern oil as sanctions rearrange oil market.
“ For traders, Russian sanctions and Trump’s pressure on Canada and OPEC are a golden opportunity.”- Julianne Geiger, OilPrice.com
Oil traders are taking large positions in the Brent-Dubai spread to speculate on the price differential between Middle Eastern crude and Brent, the global oil benchmark . This speculation has reached record levels thanks to U.S. sanctions on Russian oil forcing buyers to look for supply elsewhere. This situation presents a lucrative opportunity for traders looking to capitalize on it.
Last week, open interest in the Brent-Dubai contract rose to an all-time high of 448,000 contracts, according to Bloomberg.
This spike is caused by the fact that the Dubai crude oil price recently touched the highest premium over Brent in at least 10 years. The reason is that buyers who could previously rely on Russian oil are now diligently looking for alternatives. Many are focusing on the Middle East. Rising demand has caused Middle Eastern oil prices to rise faster than crude from other regions.
This is creating quite a stir in the market.
European refiners that typically buy oil from the North Sea or Kazakhstan are seeing their usual supply take a new route – from Asia. Asian refiners, looking for a stable supply of competitively priced oil, are buying up everything, regardless of supplier.
For traders, sanctions on Russia, Trump’s grip on Canada and pressure on OPEC are a golden opportunity.
For refiners and buyers, the measures present a new challenge in a world where energy flows are anything but predictable. As long as sanctions remain in place and Russian oil remains off-limits to many, new large positions can be taken in Middle East oil. Price volatility in global crude oil markets remains this way.
The most recent Reuters investigation suggests that Saudi Arabia has increased its official selling price for Asia will start raising in March.
That is the highest price against benchmark prices since January 2024.