Gulf Oil Exports Back Near Pre-War Levels as Physical Crude Premiums Collapse, Dated Brent Gap to Futures Down From $30 to $3.70

Since the US-Iran war began about eight months ago, the price of real, deliverable barrels has often run well ahead of the futures screen. In the past month, that gap has mostly disappeared.

The premium of Dated Brent over ICE Brent futures stood at about $30 a barrel in early October. It is now roughly $3.70, according to Bloomberg's reporting on physical trading. That is close to 90% of the premium gone in a month.

Outright prices are still high. Dated Brent was above $108 a barrel on Monday, Nov. 2.

The physical market flips

One key North Sea grade was offered at more than $20 over Dated Brent a few weeks ago. On Monday it slumped to a $1.40 discount, Bloomberg reported. North Sea Forties had been quoted above $140 a barrel in early October.

The weakness is spreading to other regions, per Bloomberg's account of cargo trading:

• As many as 10 to 15 Nigerian cargoes for November loading were still unsold as of Friday, even as December trading began.
• Angola is pushing unsold cargoes into its December programme.
• A cargo of Republic of Congo Djeno crude sold at a $25 discount to Dated Brent, a level traders say they have not seen in years.
• Kazakhstan's CPC Blend is at its steepest discount in 14 years.
• A mid-month North Sea cargo offered below Brent found no buyer.

Peter Hackworth, an energy trader at Goldman Sachs, flagged the shift in the bank's morning execution note today, Nov. 3. He said the front-month Brent contract touched its 50-day moving average at $103.72 before bouncing, and called the collapse in physical premiums "more interesting" than the futures move. The Brent window, he wrote, was trading almost $1 a barrel below Dated Brent, Dubai was weakening and West Africa was "a mess."

His conclusion: "Needless to say this does NOT suggest a tight market."

Where the barrels came from

Bloomberg's tanker tracking puts October exports from Saudi Arabia, the UAE, Iraq and Kuwait combined at just over 15 million barrels a day. That is a 10% monthly gain and roughly the pre-war rate, even with renewed attacks on shipping near the Strait of Hormuz.

Goldman had estimated in late September that so-called dark exports had already restored total Persian Gulf flows to pre-war levels.

The physical discounts started showing up before the latest slide. On Oct. 23, Bloomberg reported that Iraqi Basrah Medium sold at a discount of almost $10 a barrel to physical Dubai on a ship-to-ship basis in the Gulf of Oman. A month earlier it had been offered near parity. Asian refiners told Bloomberg that producers and traders were getting better at moving cargoes through Hormuz despite attacks, and that refiners in India, Taiwan and South Korea were buying or tendering for crude deliverable as late as early 2027.

President Donald Trump has said more crude is leaving the region than before the conflict. Export data now line up with that claim, though the shipping attacks continue.

The Dubai market is sending the same message. The prompt Dubai timespread has flipped into contango, with the November contract about $2 a barrel below December, the first time near-term supply has outpaced demand since July.

Paper and physical were telling different stories

The two markets diverged for most of October. On Oct. 23, Brent futures were nearing $115 a barrel and headed for a third weekly gain, the highest since May.

Warren Patterson, head of commodities strategy at ING, said at the time that the move higher in futures was "not fundamentally driven" and that the market was "trading supply risks." The concern, he said, was how sustainable Middle East flows would be "with renewed attacks."

Hackworth's note ties the latest unwind to de-escalation talk. Futures have since come off those highs, and the physical collapse suggests buyers no longer feel they must pay up for prompt cargoes.

Goldman's commodity team, in a note raising its December 2026 Brent forecast to $105 from $90, said a jump in the risk premium to around $27 explains most of October's crude price rally. It estimated that Brent's fair value was little changed in September and October because global inventories held roughly flat.

The fleet damage argument

Not everyone reads the recovery as durable. Karl Miller, in a Nov. 1 assessment of the Persian Gulf tanker fleet, counts 79 named tankers in the Gulf damage and casualty record. Thirty-five are VLCCs, which carry about 2 million barrels each. That is roughly 70 million barrels of carrying space per loading and more than 14 million tonnes of deadweight, he calculates.

Miller cites an Oct. 30 assessment that 18 non-Iranian VLCCs are likely out of operation, or about 36 million barrels of loading space. He lists October casualties including the EVER VICT, which lost command, the PETRO DOLPHIN, evacuated and drifting, and the GEM NO 2, leaking oil into the Gulf.

In one of his sensitivity cases, 10% of ships are lost and the round trip stretches from 30 days to 40. That leaves 67.5% of the old service. For diesel and jet fuel, he calculates 373,750 barrels a day that never arrive.

Sultan Al Jaber, ADNOC's chief executive, said at the opening of ADIPEC in Abu Dhabi on Monday that shipping and logistics have climbed from under 5% of the cost of a barrel to more than 30%. He said diesel stocks in some markets are at their lowest seasonal level in 35 years.

The two accounts are not necessarily in conflict. Crude cargoes have found their way out through alternative routes and ship-to-ship transfers, while the fleet that carries refined products has taken heavy losses. Miller's figures are his own estimates and scenarios.

What the discounts do and do not show

One market analysis argues the glut is hitting Atlantic Basin and Caspian grades first, not the Gulf barrels whose return caused it. Its reading is that restored Middle East supply is displacing West African and CPC crude from Asian refinery slates. The analysis says the cargo data suggest this but do not prove it.

If that is right, the weakness would reach the benchmarks last. Front-month Brent is still trading near $103.50, according to that analysis, which describes the price as largely a bet on future disruption.

That leaves a concrete test in the coming weeks: whether the unsold Nigerian November cargoes and Angola's rolled December programme clear at higher prices, or whether the discounts spread to the benchmarks. Ship attacks near Hormuz are still being reported, and any new hit on Gulf loading could reverse the physical slide quickly.