Asian refiners pay record premiums for non-Middle East crude amid tight supply

Refiners in Asia are now competing aggressively for non-Middle Eastern crude, pushing prices for alternative grades to historic highs. Supplies from regions such as North America and the North Sea are trading at unusually steep premiums compared with Dated Brent, reflecting growing pressure in global oil flows.

The region’s refineries, many of which are built to process heavier sour crude typically supplied by Gulf producers, are facing a tightening supply situation. Reduced availability from the Middle East, combined with shipping constraints affecting tanker movements around the Strait of Hormuz, has forced buyers to seek replacement barrels from farther away at significantly higher costs, often exceeding $10 per barrel above benchmark levels, Oilprice.com reported.

Even with these elevated input costs, refiners continue to operate profitably. Strong refining margins, driven by high product prices relative to crude costs, are cushioning the impact of expensive feedstock procurement.

Among the standout price movements, Norway’s Johan Sverdrup crude has recently been quoted at roughly $11.30 per barrel above Dated Brent, based on market chatter reported by Bloomberg sources.

U.S. Mars crude has also experienced a sharp repricing. After trading at a small discount earlier in the year, it surged to a premium of about $11 per barrel in early March before easing to around $6 per barrel in later deals.

READ ALSO: Cardoso warns Middle East tensions may derail rate cut prospects

In Southeast Asia, several regional crudes that were once considered secondary supply options are now highly sought after. Grades such as Malaysia’s Labuan, Indonesia’s Minas, and Vietnam’s Bach Ho have jumped from historical premiums of about $2 per barrel to levels exceeding $10 over Brent, traders say.

Analysts attribute the shift to aggressive buying from refiners looking to secure alternative supply streams. Kpler analyst Muyu Xu noted that procurement of Atlantic Basin and U.S. crude has accelerated despite higher freight costs, longer shipping distances, and a backwardated Brent structure.

Japanese refiners are among the most active buyers, reportedly securing around 13 million barrels of U.S. WTI and Mars for April loading, potentially a record monthly volume.

In Southeast Asia, Thailand’s PTT is said to have purchased Forties from the North Sea as well as Angolan cargoes, while South Korea’s GS Caltex has taken Kazakh CPC Blend for April delivery, according to Argus Media reports.

Chinese refiners are also expanding purchases, booking millions of barrels of West African crude alongside continued inflows from Brazil for March and April, Kpler’s Xu added.