Three-layer pricing read

① OSP official formula (SOMO Nov 9 announcement, December-loading Asia): Basra Medium at a $8.80/bbl discount to the Oman/Dubai average (cut by $6 from November's -$2.80); Basra Heavy at a $11.80/bbl discount (cut $6 from -$5.80). This followed Saudi Aramco's December Arab Light cut to -$6.50 (narrowest since May 2020); SOMO's Medium -$8.80 runs deeper than Saudi Arab Medium -$8.00 and Heavy -$11.80 deeper than Arab Heavy -$9.35 - a share-defending price war.

② Spot / term discount: recent loading cargoes keep deep term discounts of about -$34.50 (medium) and -$37.00 (heavy) FOB, deeper than pre-war, to hedge freight and war risk.

③ Loading premium mechanism: non-Hormuz loadings carry a layday premium - ≥$0.20 for days 1-10, ≥$3.00 for days 11-30, with offshore STS transfer adding about 30%.

Net-back: Medium net FOB ≈ -$8.80 - 34.50 ≈ -$43.30/bbl; Heavy ≈ -$11.80 - 37.00 ≈ -$48.80. Delivered to China ≈ ICE Brent +$10-13/bbl (narrowed from +$12-20 in October).

Macro & geopolitics

  • Brent front-month (Jan) settled at $95.84/bbl (+0.02%, flat); WTI front-month (Dec) at $88.56/bbl (-0.20%, down); both posted a second straight weekly decline, each down ~2.5% on the week.
  • IEA November 13 report: Gulf exports recovered to about 18.4 mb/d (~74% of pre-war); October saw global supply exceed demand for the first time since the war began, with a Q4 surplus expected; 2026 demand cut by ~2.7 mb/d to 102.3 mb/d; diesel remains tight (October ~$180/bbl, +77% pre-war).
  • Hormuz: tanker attacks persist; the MT Velos Sapphire probable missile strike killed one crewmember (Nov 6, confirmed by manager). War-risk premiums have surged from 0.1%-0.25% of hull to 7.5%-10% (peak 12.5%); single-VLCC voyage additional cover rose from $0.25m to $10m. Washington's strategic focus has shifted toward a blockade of Iran; Trump said there is no need for a deal with Iran, and Netanyahu urged resuming strikes.

Compliance note (F8): Iran-origin crude falls outside SNSUC's trading scope under sanctions-compliance red lines; this watch covers the Strait of Hormuz only as objective geopolitical news. Iraq's Basra grades (SOMO direct signing available) are tradable supply.

Practical note: Chinese independent refiners keep locking December Basra medium/heavy and Al-Shaheen cargoes to replace Iranian barrels; ahead of SOMO's planned January 2027 standalone 'Basra Medium' launch, buyers should pin down the pricing-benchmark switch clause to avoid differential mismatches from the grade split.