SINGAPORE: DME Oman's premium to Dubai rose above $1 a barrel in the Middle East crude market on Monday as traders covered short positions on the last trading day of the month.
August-loading Basra Light came under pressure as trade remained muted, with refiners shying away from buying the flagship grade of Iraqi crude, worried that the militant insurgency in the country could spread to the area where the oil is churned out and exported.
"The Iraqi situation is unpredictable, which makes it hard for us to buy Iraqi crude on the spot markets," said a Seoul-based refining source. He declined to be named as he was not authorised to speak to the media.
"To a refiner, stable crude supply is the priority."
Demand for spot cargoes has also been hit as any purchases made now will arrive in September, a low-season for oil product usage, and as many refiners have scaled back production as excess capacity in the sector has squeezed their profits.
Some traders said refiners would buy Basra Light if prices were low enough.
"I don't think there is any big risk to physical disruption but risk is risk ... That's why refiners may try to buy at a level that takes care of this risk," said a Singapore-based trader.
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