Major Oil Spread Widens as Concerns Grow Over Libyan Supply

AFRICAN STOCKS AND FINANCEAugust 27, 2024 at 6:18 PM UTC

TLDR

Brent-Dubai futures swaps spread widens to $3/ barrel, highest in 10 months due to Libya supply disruption fears.
Libya turmoil leads to production halt at oil field and gradual reduction in output by major oil companies.
Stable oil output in Libya threatened as authorities in the country's east stop production, impacting global oil market.

The spread between European Brent oil futures and Dubai crude swaps surged to its widest point in 10 months on Tuesday, driven by fears of supply disruptions from Libya.

The premium, known as the Brent-Dubai exchange of futures for swaps, expanded to approximately $3 a barrel, according to PVM Oil Associates data cited by Bloomberg, marking the highest level since early October.

Libya, which had maintained stable oil output amid relative peace in recent years, faces renewed turmoil as authorities in the country's east announced a halt in production. At least one oil field has shut down completely, and two of Libya's largest oil companies have begun gradually reducing production.

Key Takeaways

The widening Brent-Dubai spread has significant implications for global crude flows. A higher Brent premium could make other grades priced against the North Sea benchmark more expensive, while Middle Eastern grades, priced relative to Dubai crude, become more competitive. It could also lead European refiners to seek alternative sources of light, sweet crude from Africa and the Americas, as Libyan barrels become scarce. Meanwhile, Asian refiners may increase their purchases of denser, sulfur-rich Middle Eastern oil, which is priced against Dubai crude.

Commodities

Oil Production

Libya

North Africa

Brent Oil

Oil Futures