Crude swung sharply this week between war premium and diplomatic de-escalation signals. Brent hit an intraday $108 and settled at $107.63 (+6.34%) on Thursday, then eased to about $103.5 on Friday on news that Gulf foreign ministers were brokering a temporary Hormuz shipping arrangement; WTI similarly pulled back from above $100 to about $99. The week still closed up over 7%, the first sustained hold above $100 in nearly four months.
1. Three-layer pricing
1. OSP (official): SOMO set September Asia Basrah Medium at a -$4.00/bbl discount to the Oman/Dubai average (August -$6.50) and Heavy at -$7.30 (-$8.80), tightening $1.50–$2.50/bbl versus August — a clear intent to defend price amid war risk.
2. Spot discount (term rebate): Asian refiners, wary of Hormuz shipping risk and record VLCC rates, show limited appetite; spot stays deeply discounted — Medium about $25–29.80, Heavy about $27.80–29.80/bbl off OSP.
3. Loading premium +30% mechanism: the September spot tender (FOB Basrah) prices by decade — loading premium ≥$0.20 (1–10) and ≥$3.00 (11–30) per barrel, FOB ship-to-ship transfer with roughly +30% risk loading.
2. Net delivered discount (Medium, USD/bbl)
| Step | Value |
|---|---|
| Oman/Dubai avg (est.) | ≈100.0 |
| less OSP discount | -4.00 |
| = FOB list | ≈96.00 |
| less spot rebate | ≈27.0 |
| = FOB net | ≈69.00 |
| plus STS loading premium | 0.20–3.00 |
| plus record VLCC freight (up to ~$434k/day) + war risk | rising |
China delivered net cost ≈ 69 + freight + insurance: nominally deep discount, but logistics and insurance premiums partly offset the advantage.
3. Practical notes
- Hormuz transits fell to only 7–9 vessels on Sep 9–10 (vs ~130/day pre-war); no VLCC has exited since Sep 2, with many ships going dark (AIS off) per Kpler.
- Bab el-Mandeb: Houthis took Mokha (Sep 10) and Perim Island (Sep 11); Red Sea reopening is off the table, and Saudi's East-West pipeline saw preventive partial shutdowns.
- With both chokepoints stressed, Asian refiners should secure term volumes and weigh Cape of Good Hope diversion and strategic stocks.
Sources: Argus Media / chemicalsupdates (MidEast Sour Crude Daily) / Reuters / Jin10; OSP per SOMO official notices. Subject to live updates.
