(Bloomberg) -- Oil prices in the Middle East tumbled as the prospect of higher supplies from OPEC+ sparked a selloff in the region’s crudes.
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The cost of Oman crude on the Gulf Mercantile Exchange slipped below Brent on Tuesday for the first time since late 2024, according to data compiled by Bloomberg. That marks the end of the Middle Eastern grade’s longest run of premiums over the global benchmark since 2023.
OPEC+ jolted the global oil market this week, saying it would proceed with a plan to revive halted production in tranches from April. The decision — which over time may expand its supplies by more than 2 million barrels — ran counter to most analysts’ expectations. The shift helped to drag futures broadly lower, adding to investors’ concerns just as they dealt with escalating trade tensions.
Traders flagged oversupply concerns stemming from the OPEC+ supply plan, as well as from the possibility of a change in Washington’s stance toward tough sanctions on Russia. Meanwhile, sensitive supplies of Iranian and Russian crudes continue to flow to customers in China, albeit with some hurdles.
Key timespreads that gauge the health of the region’s Dubai benchmark also slumped. The difference between the second- and third-month contracts narrowed to just 38 cents on Tuesday, compared with $2.55 in late January, according to data from broker PVM Oil Associates Ltd.
The move indicates cooling concerns about tight supply, and is a sign that the bumper premiums seen in Middle Eastern markets after US sanctions on Russian and Iranian oil earlier this year aren’t being sustained.
At that time, there was a scramble for alternative crudes from the Middle East that ultimately spurred some of the biggest price increases for regional producers in years. That rally didn’t endure, and now those contracts are the most actively traded, compounding recent declines.
Weaker timespreads have weighed on Dubai more than Brent, causing the differential between the London and Middle East marker — known as the EFS — to widen to 84 cents a barrel versus 31 cents last week.
Those moves have forced the window for arbitrage cargoes from Europe and the US to Asia to “slam shut”, according to Neil Crosby, an analyst at Sparta Commodities.