Saudi-led surge returns Gulf crude to pre-war levels, and the region’s oil market is slipping into surplus

Gulf barrels outrun demand again: The region’s oil market is showing signs of surplus for the first time since July. Dubai’s nearest timespread, which sets the price for nearly all crude exported from the region, slipped into contango this week, with the November contract trading c. USD 2 / bbl below December, traders tell Bloomberg. Saudi Arabia, the UAE, Iraq, and Kuwait shipped a combined 15.53 mn bbl / d of crude in October, up 10% from September and roughly in line with pre-war levels, according to tanker-tracking data compiled by Bloomberg.

SOUND SMART- Contango means prompt oil trades below later-dated oil and is a sign there’s no rush for barrels today.

Saudi Arabia did the heavy lifting last month, raising exports 13% to 7 mn bbl / d, with Red Sea port Yanbu up 35% to 3.07 mn bbl /d after its East-West pipeline came back from a September attack launched from Iraq. Iraq added 9.5% to 3.35 mn bbl, Kuwait boosted shipments by a third to 1.44 mn bbl / d, and the UAE edged up to 3.74 mn bbl / d, its highest since July. Iran shipped nothing for a second month under the US naval blockade.

Physical markets are softening across the board. Spot deals in S&P Global’s Dubai trading window, which usually price at a premium, came in near parity with the benchmark, and a North Sea cargo offered below Brent found no buyers. A month ago, such cargoes fetched premiums. “This time, the increase is more gradual,” June Goh, senior oil market analyst at Sparta Commodities, tells the business information service. In June, she said, a backlog of oil sitting on supertankers exited the Gulf all at once. Brent crude futures are holding above USD 100 a barrel-mark amid reports that Washington carried out an attack on Iran’s Qeshm Island on Monday.