Physical crude prices near $110 as Red Sea, Hormuz disruptions intensify

Physical crude oil prices across the Middle East, Europe, and Africa surged to two-month highs this week, with some cargoes nearing $110 a barrel, as renewed attacks in the Red Sea and continued blockades of the Strait of Hormuz left Asian refiners scrambling to secure alternative supplies.

Dual Chokepoints Under Threat

Attacks on two tankers in the Red Sea by Yemen's Iran-aligned Houthis triggered a rerouting of Saudi oil shipments via the longer Cape of Good Hope route, compounding disruptions already caused by the ongoing U.S.-Iran conflict that has repeatedly choked traffic through the Strait of Hormuz since late February. Spot premiums for Middle East benchmark Dubai to swaps doubled on Thursday to $12.74 a barrel, while Oman's premium climbed to $12.62 — both the highest since end-May, according to Reuters. The premium for Abu Dhabi's flagship Murban crude surged to $19.04, its highest since April, on tight supply for light-sour grades as ship attacks in the Black Sea compounded the problem.hydrocarbonprocessing+2

Saudi Aramco has responded by offering additional spot crude cargoes for loading from Egypt's Mediterranean port of Sidi Kerir, transported via the Suez-Mediterranean Pipeline, according to five trading sources cited by Reuters. South Korea's SK Energy chartered the VLCC DHT Stallion to load 2 million barrels of Saudi crude from Sidi Kerir, taking the Cape route to avoid Red Sea risks, according to Argus Media.reuters+3

Indian Refiners Diversify at Speed

Indian state refiners including Indian Oil Corp., Bharat Petroleum, and Hindustan Petroleum have been reshaping their crude import strategies since the conflict began. Bloomberg reported that India's Middle Eastern crude imports fell to their lowest level since at least 2013 during the second quarter of 2026. Bharat Petroleum's chairman said the company has been increasing spot purchases after Gulf suppliers declared force majeure, with Russian oil now representing 40-45% of the refiner's overall supply.economictimes+3

India has been planning to reduce reliance on Middle East long-term contracts and expand purchases from Guyana, Brazil, and the United States. Discounts on Russian crude sold to India have now evaporated due to the fresh Middle East supply crunch, Reuters reported on July 23.rigzone+2

Premiums Spike Across Global Markets

North Asia refiners are turning to Atlantic Basin crude, with two major Chinese refiners purchasing most September-loading Russian ESPO Blend cargoes. North Sea crudes also jumped, with Ekofisk's premium to dated Brent hitting a one-month high. The Brent premium to Dubai settled at $13.22 per barrel on Thursday, the highest since early May, according to LSEG data — a signal that the arbitrage economics now favor long-haul shipments from the Atlantic Basin and West Africa into Asia as traditional Middle Eastern supply routes remain under threat.thejakartapost+2