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Murban crude oil prices are at a two-month high due to strong demand

The spot premiums for Murban oil produced in the United Arab Emirates have reached their highest level in the past two months. This is due to the?strong demand of Asian buyers who are replacing U.S. supplies now that the arbitrage has closed.

Indian refiners also use Murban as a substitute for Russian oil. This is what drives the price of Abu Dhabi's flagship Light Sour Grade despite abundant supply.

Data showed that the spot premium for Murban March loading was $2.38 per barley to Dubai quotations on Tuesday. It had reached $2.53 per barrel last Wednesday, its highest level since early November.

Murban was the best-performing medium-sour grade this month, beating out other grades like Qatar's al Shaheen and Oman which were trading at a discount to Dubai benchmark.

ARBITRAGE SUPPLIES ARE EXPENSIVE

Since late December, the price spread between U.S. West Texas Intermediate (WTI), and Murban, delivered to North Asia, on a cost and freight basis, has been in a positive zone, indicating that the 'arbitrage' for WTI flows is over, according to Samuel Kong, senior analyst at FGENexant.

He added that "Asian buyers are less inclined to buy long-haul sweet grades due to the wide Brent/Dubai differential and high freight costs."

LSEG data shows that the premium of Brent crude oil to Dubai has risen since early December. It reached over $2 per barrel on Wednesday, the highest level since July. This was due to tensions in Iran, Venezuela and other countries.

The cost of shipping West Texas Intermediate into the region has also increased, making Murban a more competitive product.

Chartering a Very Large Crude Carrier for the?shipment of 2 million barrels from the U.S. Gulf Coast into China has risen 61% over two weeks to $13.5million on Tuesday.

Murban is also a popular alternative to the Caspian Pipeline Consortium oil, according to traders.

INDIA DEMAND

Due to tougher sanctions from the west, Indian refiners are trying to reduce their reliance on Russian crude oil.

Kpler data shows that India's crude imports to the Middle East in December reached 2.78 million barrels a day and have been at 2.86 million bpd this month. This is the highest level since April 2022.

Bharat Petroleum, a state-run company, has won its tenders for one year to purchase Iraqi crude oil and Oman oil. It is also looking for Murban oil in a separate bid, traders reported.

Each cargo contains 500,000 barrels.

(source: Reuters)