On Monday, Nov 2 settlement, international crude posted its sharpest one-day decline in three months. Brent front-month settled at $104.77/bbl, down 7.63% on the day; WTI front-month settled at $96.46/bbl, down 7.36%. The move was driven by both Washington and Tehran signalling willingness to enter talks, which rapidly unwound the Middle East geopolitical risk premium that had been priced into oil and European gas.
1. Three-layer pricing read
SOMO's December Asia Official Selling Prices (OSP) versus the average of Oman/Dubai quotes:
| Grade | Dec Asia OSP (vs Oman/Dubai) | vs November |
|---|---|---|
| Basra Light | +$0.45/bbl | sharply tighter (November was a deeper discount) |
| Basra Heavy | -$0.95/bbl | sharply tighter (November -$5.80) |
In the spot leg, recent-loading cargoes show FOB dark discounts (term rebates) of about -$34.50/bbl for Medium and -$37.00/bbl for Heavy. After freight and war risk, buyers' net delivered discount is roughly -$37.3 (Medium) / -$42.8 (Heavy) vs Oman/Dubai, with delivered cost running about +$12-20/bbl over ICE Brent.
2. Net delivered calculation
For Medium: OSP basis (now a small +$0.45 premium to Oman/Dubai in December) plus the spot FOB dark discount of -$34.50, then freight and war-risk friction (single-VLCC voyage additional insurance roughly $6-10 million, hull war-risk premium 6%-10%) keep delivered net at a +$12-20/bbl premium to ICE Brent. Procurement should anchor on delivered net price, not the OSP list.
3. Practical notes
- Hormuz risk stays elevated: on Nov 2 the UK Maritime Trade Operations (UKMTO) issued advisory #193 after a merchant vessel was hit by an unidentified projectile ~9 nm northeast of Lima, Oman, with hull damage; the same day the Iranian Navy said a tanker struck a mine and caught fire in the eastern prohibited zone. The International Maritime Organization (IMO) says it cannot confirm mines have been cleared in the traffic-separation scheme and still advises against transit. October saw at least 34 confirmed attacks in and around the strait, of which >=19 involved crude tankers - the highest since late February.
- War-risk cost: hull war-risk premium holds at 6%-10%, with single-VLCC voyage additional insurance around $6-10 million, lifting discharge and trans-shipment costs materially.
- Chinese independent refiners keep locking Basrah Medium/Heavy and Qatar's Al-Shaheen at ICE Brent +$12-20/bbl delivered to reduce reliance on restricted origins.
Sources: CCTV Finance, Xinhua Finance, Sina Finance, Wallstreetcn, Eastmoney, Shipping Gazette, Xinhua, International Maritime Organization (IMO), UK Maritime Trade Operations (UKMTO), Hamer Intel public reports.
Compliance note: Iranian-origin crude is excluded from SNSUC's tradable universe under our sanctions-compliance policy; the company does not transact Iranian grades. Iraqi Basrah grades remain tradable and SOMO contracts are available.
