Global oil premiums are declining as increased production from the Middle East, Latin America, and Europe coincides with the end of peak summer demand, traders and analysts reported Thursday. The six-month time spreads for Brent, WTI, and Dubai crude have narrowed by over $1 per barrel, signaling easing supply tightness as OPEC+ prepares to boost output in September.
Sanction Fears Ease, Refinery Demand Softens
Concerns over potential U.S. sanctions disrupting Russian oil flows have diminished, further pressuring prices. Analysts note that U.S. refinery activity will taper off post-summer, reducing immediate crude demand. Citi analysts suggest Brent could drop to the low $60s if Friday’s U.S.-Russia talks in Alaska yield progress toward a Ukraine ceasefire.
OPEC+ and Non-OPEC Supply Surge
Traders anticipate rising supply as OPEC+ ramps up production, while new output from Guyana, Brazil, and Norway adds to global inventories. With summer demand waning, European diesel margins are cooling, and Saudi Arabia’s crude-for-power usage is declining. Market watchers question whether China will sustain high import levels to absorb excess supply, particularly from Saudi Arabia.
Asian Refiners Absorb Atlantic Basin Crude
Middle East spot premiums for Dubai and Oman have hit one-month lows, though Dubai remains stronger than Brent, keeping arbitrage flows to Asia viable. Asian buyers have already secured millions of U.S., African, and European barrels for September-October delivery. However, uncertainty lingers over Russian supply, with India seeking alternative spot cargoes to offset reduced purchases from Moscow.