Hormuz Disruption Pushes Brent-Dubai Price Gap to Highest Level in Years

Brent Crude’s Premium Over Dubai Hits Multi-Year High Amid Market Turmoil

The price difference between Brent crude and Dubai oil has soared to its highest point since 2022, highlighting the oil market’s heightened sensitivity to global disruptions.

On Tuesday morning, Brent crude was valued at approximately $83–$84 per barrel, marking a daily increase of over 7%. In contrast, Dubai crude remained steady near $68 per barrel. The Exchange of Futures for Swaps (EFS)—which measures the gap between Brent futures and Dubai swaps—jumped to more than $6 per barrel, a significant rise from under $2 just a week earlier, before tensions escalated in Iran. Bloomberg reports this is the largest spread seen in years.

Brent serves as the main global benchmark for seaborne oil, while Dubai is the reference for Middle Eastern oil shipments to Asia. A substantial Brent premium over Dubai typically signals tighter supply and greater risk for Atlantic Basin oil compared to Gulf-region barrels.

Oil futures markets, where contracts for future delivery are actively traded, are swiftly adjusting to perceived risks, often reflecting potential shortages before any physical supply interruptions are evident.

The main driver behind this volatility is clear: Tanker movement through the Strait of Hormuz has largely stalled due to Iranian threats and ongoing conflict. Even without an official closure, shipping companies are unwilling to risk passage. As a result, Gulf oil is stranded, shipping costs are climbing, and trading in Middle Eastern oil benchmarks has become increasingly erratic.

Brent prices, meanwhile, are factoring in the added geopolitical risk.

This growing price gap is significant. Should the Strait of Hormuz remain blocked for an extended period, oil producers in the region may be forced to reduce output. Experts caution that if the disruption lasts beyond three weeks, production cutbacks could become unavoidable.

Market participants are now weighing how prolonged this supply threat might be, and whether $100 oil could become the new baseline if the situation in Hormuz fails to stabilize.

By Julianne Geiger for Oilprice.com

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