Middle East Physical Crude Slides While Brent Hits Five-Month High | OilPrice.com
Charles Kennedy
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By Charles Kennedy – Oct 23, 2026, 10:30 AM CDT
In contrast with the international benchmark futures prices, the prices of physical crudes from the Middle East have softened this week, as oil continues to flow out of the Persian Gulf in ship-to-ship transfers offshore Oman and producers offer competitive prices to Asian buyers.
Some crude grades from Iraq and Oman have sunk into deep discounts to the physical Dubai benchmark. Iraq’s Basrah Medium, for example, was recently sold at a discount of $10 per barrel to the Dubai benchmark, compared to near parity to Dubai crude a month ago, traders told Bloomberg on Friday.
Robust crude oil flows out of the Middle East in recent weeks have started to pressure the key metric of strength for physical supply out of the region. The premium of Oman crude over Dubai, the measure of Middle East’s market strength, slumped this week to the lowest level since the end of July.
The Oman-Dubai crude differential had soared to as high as $65 per barrel in March when the Strait of Hormuz was at a virtual closure and no crude cargoes were moving out of the Strait. The premium of Oman crude later slipped into a discount in the three weeks in the middle of June and early July, during which the U.S. and Iran were looking to negotiate a deal.
The differential blew out again in August and especially in September, when hostilities resumed.
But as the Middle Eastern producers accelerated shuttle-shipping through the Strait of Hormuz and ship-to-ship transfers in the Gulf of Oman, flows have recovered in recent weeks.
The higher availability is depressing the prices of physical crudes from the Middle East in a move that’s opposite to the Brent Crude futures, which jumped to a five-month high of $114 per barrel this week.
The futures market is disconnected from the fundamentals and physical markets as the paper market fears an escalation and renewed supply disruption, while the physical market reflects rising volumes transiting Hormuz.
By Charles Kennedy for Oilprice.com
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Charles Kennedy
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