Qatar issues Al Shaheen tender, premiums set to rebound

Quantum Commodity Intelligence - QatarEnergy has issued an April sell tender for its keenly-watched Al Shaheen grade, with premiums for the Middle East medium sour grade set to rebound following steep declines since the summer peaks.

Qatar is offering two cargoes for April, rather than the usual three, with one on early-month dates and the other for late April. Bids close on 15 February and should have validity until 16 February.

Traders said the grade is currently valued at $2.40-$2.60/b over Dubai swaps after a significant rise in medium sour crudes so far this month, boosted by increased buying from China and an expected slowdown in the flow of Russian Urals crude to India, which competes with Middle East grades in the medium sour space.

For February loading, the state-owned firm awarded the medium sour grade at premiums of $1.30-$1.40/b to the underlying Dubai swap, the lowest premiums since June of 2021, according to Quantum records.

The regular monthly tender from Qatar is seen as a bellwether for the Middle East medium-sour crude market, as the grade is a component of the Dubai 'basket' of crudes, regularly setting the price of Dubai as the lowest of the five deliverable grades into the pricing mechanism.

The expected premiums are largely a function of the market structure, as Al Shaheen prices during the month of loading, so it includes two months of backwardation – hence during the loading month of April, June is the trading month for Dubai.

So far in February, the M1/M3 (Apr23/Jun23) Dubai cash spread has averaged $2.05/b and was assessed by Quantum at $2.45/b on Tuesday.

Al Shaheen is also seen as a guide for Saudi Aramco's flagship Arab Light OSP, which traders said is on course for a healthy increase for April-loading crude from the current Platts Dubai/DME Oman +$2/b.

The state-owned energy producer also issued tenders for one cargo each of Qatar Land and Marine grades.