Brent v Dubai

Saudi Arabia’s November crude allocations were released on 10 Oct, at around 39-39.5mb. This was the year’s second-lowest allocation, far below the 51mb for October. On the other hand, this value was well within the usual range, around 2mb difference compared to last year’s November value. Following this, there was some panic buying on 13 Oct, with Brent/Dubai strengthening around 40c/bbl in the front as Dubai spreads were heavily sold after players feared Chinese players taking on fewer Dubai barrels. However, on 13 Oct, the strength was sold by majors and trade houses, and there was strong selling on screen. This allowed for Brent/Dubai to drop again to a d/d loss. Interestingly, there was not so much buying in the Dubai complex, but there was pressure in Brent spreads, with Dubai remaining stable.

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Brent/Dubai found the floor last week as Oct’25 bounced higher from below -$2/bbl, reaching -$1.10/bbl by 22 Sep. Despite the seemingly orderly rally, there were large intraday volatility spikes with Dubai spreads being heavily sold on screen. However, by 23 Sep, prices retraced lower to -$1.70/bbl, underscoring the elevated volatility in the Dubai complex.

The Dubai market has been rife with uncertainty over the past week: we began the week commencing 1 Sep gapping lower with the market increasingly oversaturated towards selling.

There has been relentless selling in Brent/Dubai this fortnight – Not just in the front, but a huge amount of selling in the Q1 and Q2’26 differentials too. At the same time, there has been a lot of buying in the Dubai structure, with strong selling, even in backend 2026 boxes. Stopping out from this length drove some weakness. In the past week or two, no one has really bought Brent/Dubai, but prior to this, we had seen quite a lot of buying in the pricing window, between -$1.00/bbl and -80c/bbl.

The Brent/Dubai has seen a period of consolidation over the fortnight as its downtrend has been halted. While the Bal-Aug’25 contract is pricing below -$2/bbl, the Sep’25 Brent/Dubai bottomed out at -$1/bbl and is trading rangebound with an upper bound of -$0.70/bbl. The Sep/Oct’25 box has also recovered from -$0.50 up to -$0.35/bbl. While we expect medium sour crude grades to strengthen in the long term, and hence weakness in Brent/Dubai, we expect a short-term consolidation and rebound, where any bullish spikes will present a good selling opportunity. In the short term, the optics of OPEC+ completely unwinding their voluntary cuts and expectations of reduced crude burn and therefore higher exports have dampened Dubai sentiment. In addition, less buying of Middle Eastern crude from USGC refiners as the US restored Chevron’s license to produce oil in Venezuela, would also support our bullish Brent/Dubai thesis. In addition, a weaker Dated/Dubai may have contributed to bearish pressure in the Dubai complex.

It was a ‘return to usual’ for the Dubai crude market, characterised by a bearish Brent/Dubai and a bullish Dubai. The Aug’25 Brent/Dubai flirted with flat on 17 July, but subsequently came off quickly down to -$1.20/bbl, the lowest level for an M1 contract since April. There is fundamental support for medium sour crude, especially as the EU introduced an import ban on refined petroleum products made from Russian crude oil from third countries. India’s Reliance also bought Murban futures for the first time, likely for September loading. In addition, with the pricing mechanism for Murban oil to be changed in the Dubai benchmark, the possibility of Murban being priced at a discount to other Dubai crudes is bullish for Dubai crude. This informs our trade idea for this report, as we anticipate a continuation of this bullish trend in Dubai crude. With the Trump administration reversing its stance on Chevron’s licence to produce oil in Venezuela, this could have implications for Brent/Dubai dynamics. Gulf Coast imports of Middle Eastern oil had ramped up sharply in July to the highest level since January.

While the Bal-Jul’25 Brent/Dubai briefly ticked up from -$1.20/bbl on 1 Jul to -$0.65/bbl on 3 Jul, the contract sold off to a low of -$1.46/bbl on 15 Jul. Similarly, the Aug’25 Brent/Dubai weakened from -$0.09/bbl on 3 Jul to -$0.45/bbl on 10 Jul

The Dubai market has largely returned to normality as geopolitical risk unwinds. As per usual, the Strait of Hormuz didn’t close this time, although there was noticeably more market anxiety. The forward curve is being heavily pressured, with Brent/Dubai boxes aggressively selling off. On the first day of July pricing, the Jul’25 Brent/Dubai fell below -$1/bbl, while the Jul/Aug’25 box came off to -$0.95/bbl, which marks an extreme contango structure. Aug’25 is following suit and was the next contract to fall below flat. Another notable drop was Q4’25/Q1’26, which fell from $0.05 to -$0.15/bbl. The market has largely disregarded the prospect of OPEC+ supply hikes, interpreting it as existing overproduction being formalised. The combination of the market buying Cal26 and selling front boxes would have put participants comfortably in the money. Here, trade houses and majors were the main players. Previously, we noted that refinery sell side hedging flows in Cal26 had distorted Brent/Dubai. Now that these flows have subsided, this distortion has left a vacuum conducive to a mean reversion. There is greater conviction in the downside for Brent/Dubai boxes as these flows are more speculative, whereas refinery flows are more price-agnostic.

Given the return of geopolitical risk and the resulting hysterical volatility in the futures market, it has been a quieter-than-expected period in the Dubai market. In theory, Brent/Dubai was expected to crater on fears of supply disruption in the Middle East with the reignition of conversations around the potential closure of the Strait of Hormuz

The now Bal-Jun’25 Brent/Dubai differential continued to see bids towards the end of May, with the support compounded by…