Brent Surpasses $100 as Physical Market Shows Growing Stress

Brent crude prices have surpassed $100 per barrel for the second time this year, driven by fresh disruptions to Middle East oil flows. However, the real concern lies in the physical market, where Oman/Dubai crude is trading at a significant premium to Brent.

The nearly $20 gap between Brent and Oman/Dubai crude suggests that there is growing stress in the physical market. Aamir Makda, commodity analyst at Choice Broking, notes that Middle Eastern benchmarks typically trade at a premium because they are lighter and easier to refine. However, the current inversion indicates a much higher premium on Middle Eastern barrels.

Vandana Bharti, head of commodity research at SMC Global Securities, adds that falling inventories have also contributed to the pressure. 'That leaves the market with less cushion to absorb a sudden supply disruption,' she says.