North Sea oil prices slumped to fresh lows on Wednesday as physical crude traders weighed the prospects of a de-escalation of the Iran war following US President Donald Trump's heavy defeat in the midterm elections. One trader cut its offer of the key crude grade Forties, for delivery to the Dutch port of Rotterdam, by $3.80 to a premium of $1.35 a barrel to regional benchmark Dated Brent, according to people monitoring a pricing window organized by S&P Global Energy. Excluding freight costs, that offer implies a discount of $3 to $4 to the marker, the widest since the pandemic in 2020, according to data compiled by Bloomberg.
Steeper discounts are typically signs of a weakening market. This trend, which began before the US elections, highlights growing expectations for a de-escalation in the Middle East, according to traders of key North Sea crudes. Such a scenario could help smooth the passage of tankers transporting hundreds of millions of barrels of Persian Gulf oil to global markets each month.
In the aftermath of the election defeat, Trump said he had no immediate plans to launch strikes on Iran. Physical crude oil prices fell significantly in recent weeks following a resurgence in exports from Middle East producers. Combined exports from Saudi Arabia, the United Arab Emirates, Iraq and Kuwait climbed by 10% to just over 15 million barrels a day last month, according to data compiled by Bloomberg from tanker-tracking and consultant estimates.
In outright terms, crude oil remains more expensive than before the war, with Dated Brent above $105 a barrel on Tuesday.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing