This watch is based on SOMO official selling prices (OSP), Argus/Reuters spot differentials and Hormuz transit intelligence, for trading and hedging decisions. Data as of 2026-10-13.

1. Three-tier pricing

OSP marker: On 8 Oct SOMO set November Basrah Medium OSP to Asia at a -2.80 USD/bbl discount to the Oman/Dubai average, and Heavy at -5.80 USD/bbl, a sharp deepening from October's 0.00/-3.30. Europe Medium was set at dated Brent -3.85, Americas at Argus Sour +3.10. The cut follows Saudi slashing November Arab Light to Asia to -5.00 (from -2.00, the steepest since Jun 2020), signalling Middle East producers defending market share.

Spot term discount: For October-loading cargoes (1-31 Oct) the spot rebate was about -34.50 Medium / -37.00 Heavy USD/bbl FOB (deeper than Aug-Sep's <-30); with the November OSP cut, delivered net economics improve further.

Loadport premium +30% mechanism: The non-Hormuz loadport premium persists — 1-10 day laycans ≥0.20, 11-30 day ≥3.00 USD/bbl FOB, plus ~30% STS (ship-to-ship) transfer surcharge to hedge transit risk.

2. Net-to-arrival discount

For Basrah Medium: OSP (Oman/Dubai -2.80) + spot rebate (~-34.50) ≈ FOB net about -37.3 USD/bbl to Oman/Dubai; adding current VLCC freight and war risk, delivered discount is deeper. Heavy is more attractive (OSP -5.80 + rebate -37.00 ≈ -42.8).

3. Hormuz and practical notes

Iran publicly confirmed on 12 Oct that Hormuz security "will not return to normal", stating at least 6 commercial vessels were struck in the corridor; US CENTCOM destroyed the Panama-flagged MV Ocean Molica on 11 Oct for breaching the blockade. London underwriters repriced Additional War Risk Premiums (AWRP) to 7.5%-10% of hull value (baseline 0.10%-0.25%), with a single VLCC voyage adding 10-20 mln USD in cover; Kpler shows ~10.3 mb/d through the strait in early October, about 76% of pre-conflict baseline. VLCC day rates remain near 1.3 mln USD/day.

Notes: (1) The deep November OSP improves Basrah mid/heavy delivered economics for Asian refiners — capture the fixing window. (2) War risk and freight stay extreme; term contracts and STS Fujairah offshore delivery help spread single-voyage risk. (3) Gulf exports show above-pre-war signs but transit remains volatile — stagger procurement and keep alternative corridors (ADCOP 1.5 mb/d, East-West Pipeline) open.

Sources: SOMO/Bloomberg (Argus-homologous)/Reuters/Newsquawk/Hamer Intel/Kpler/Golden Ten/Wallstreetcn/China Energy News.