BY COMFORT OGBONNA
Asian refiners are increasingly turning to the global benchmark ICE Brent to price their U.S. crude purchases, moving away from the traditional Dubai benchmark. This shift comes after Middle East crude prices surged to record levels this month, prompting changes in how refiners manage costs and hedging strategies, according to multiple refining and trading sources.
The transition could have significant implications for the derivatives market, potentially reducing liquidity for the Dubai benchmark as traders adjust hedges toward ICE Brent. “We’re starting to see a structural shift in pricing, with refiners looking for more stable benchmarks amid heightened volatility in Middle East markers,” one industry source said.
Asian buyers only recently began booking U.S. crude cargoes for July delivery. In one example, Japanese refiner Taiyo Oil purchased 2 million barrels of U.S. light crude through a tender, paying roughly $19 per barrel above ICE Brent for July shipments. Typically, the company buys WTI crude priced against Dubai, but sources say the surge in Dubai prices has prompted the switch. Taiyo Oil declined to comment on the transaction.
Other Japanese refiners are reportedly following suit, buying U.S. crude priced against ICE Brent instead of Dubai. The details of these deals remain private, negotiated directly between buyers and sellers.
Dubai crude hit an all-time high of $169.75 last week, surpassing Brent and making Middle East supply the most expensive oil in the world. The spike was fueled by reduced availability for trading, after S&P Global Platts removed three of the five crude grades from its Dubai benchmark, anticipating prolonged disruptions to shipping through the Strait of Hormuz. Strong demand from major international players, including French energy giant TotalEnergies, also helped support Dubai’s elevated pricing.
In response to the extreme price volatility, some Asian refiners requested that Saudi Arabia’s national oil company, Saudi Aramco, consider switching its pricing benchmark from Platts Dubai to ICE Brent, traders said. Saudi Aramco did not provide comment outside regular office hours.
The move by Asian refiners highlights the growing impact of geopolitical tensions on global oil markets. With Middle East crude prices reaching historic highs, buyers are adjusting strategies to manage costs and ensure supply stability, signaling a potential long-term shift in regional pricing dynamics.
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