SINGAPORE: Dubai-linked crude grades, such as Russian Sokol, came under pressure in Asia on Monday after the spread between the Middle East marker to Brent hit the narrowest in close to four years.
Brent-Dubai Exchange of Futures for Swaps (EFS) for September was valued at $1.22 a barrel, down 58 cents from Friday's close and the narrowest since September 2010.
The spread traded as low as $1.20 after Monday's settlement, a trader said.
A comparatively stronger Dubai versus Brent has depressed the premium for Russian Sokol, which is priced on the Middle East marker. ONGC has sold a cargo of Sokol crude for Oct. 2-5 loading via a tender to Glencore at a premium below $5 a barrel to Dubai quotes, down from premiums between $5 and $7 a barrel for September barrels.
Additional Russian ESPO supply also weighed. Russian oil firms have started marketing the three ESPO cargoes added last week to the September programme. Gazprom has a cargo loading Sept. 9-12 and Lukoil's cargo is for Sept. 20-23, a trader said.
Rosneft offered ESPO crude for Sept. 25-28 loading in a tender to close on Aug 5. Bids will remain valid until Aug. 7.
Easing Brent prices, combined with multi-year low differentials for West African grades, is expected to push more sweet oil from the Atlantic Basin toward Asia, potentially displacing some demand for sour grades.
Spot Iraqi Basra Light trade remained muted as Asian refiners continued to avoid the riskier grade in a well-supplied market.
Exports from Iraq remained near record levels, with July's volume edging up to an average of 2.442 million barrels per day (bpd) from 2.423 million bpd in the previous month, the oil ministry said on Monday.
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