Brent crude slides amid global supply fears, but strong demand from China and India, spurred by US sanctions on Russian oil, steadies Middle East cargoes.

Oil Prices Fall : Fears of a growing glut may be weighing down the world’s oil markets, but increasing purchases by China and India, partly due to further US sanctions on Russian energy, are helping producers.

Clearing Cargo Overhangs in the Middle East

Crude cargoes have now all been placed, especially from the Middle East, which briefly experienced overstock, according to traders who asked not to be named since they are not allowed to speak to the media. According to them, there is no longer much of the previous backlog of unsold shipments from manufacturers like the United Arab Emirates.

Brent Slumps Despite Growing Supply

With a 15% decline this year, Brent is among the worst-performing main commodities. Rising output outside of the alliance and higher quotas from OPEC+ are to blame for the fall. The International Energy Agency has issued a record surplus warning, while adjacent US futures contracts recently entered a bearish state known as contango.

US Stricterly Regulates Russian Flows

Washington, meantime, has increased pressure on Russian crude and its primary consumers. Sanctions against Rosneft PJSC and Lukoil PJSC, two significant suppliers, have been the most significant action. On Sunday, President Donald Trump exacerbated tensions by declaring that he would be “okay with me” if Senate legislation was filed to ban nations doing business with Russia.

Cargo from the Middle East Is Absorbent by Asian Refiners

According to dealers in the Middle East, unsold shipments from the beginning of November eventually found buyers in Asia. In addition to higher quantities from Kuwait after an outage at the Al-Zour refinery, these included multiple shipments of the UAE’s Upper Zakum grade.

Through a series of tenders, Indian processors also acquired a little more crude, but Chinese refiners purchased a significant portion of these barrels. While HPCL-Mittal Energy Ltd. acquired Qatari Al-Shaheen, Bharat Petroleum Corp. received grades from the US, West Africa, and the Middle East.

Also read ; Gold price today: MCX gold slips to ₹1,23,300 as dollar strengthens

State-owned Bharat Petroleum’s executive director of international trade, Manoj Heda, stated that there is a lot of supply in the market. But according to a Bloomberg study, “demand centers are only limited to China and India.”

Middle Eastern Grades Are Generally Strong

In comparison to other regions, the purchasing has helped Middle Eastern standards remain stable, since China and India rely on their well-established Persian Gulf suppliers. The Brent-Dubai EFS and the Brent-Dubai swap spread both went negative last week, placing the world benchmark Brent at a unique discount to Dubai.

Yet, the price of Middle Eastern crude has been falling steadily. Data from the General Index showed that throughout the month, the differences between grades like Oman, Upper Zakum, and Murban and the Dubai benchmark decreased.

Diverse Scenery Outside the Gulf

In other regions, West African markets are still slow, and the gap is still narrowing. However, dealers said that cargoes are still clearing. Refiners in Indonesia and India purchased 11 shipments late last week, while Chinese purchasers raised their purchases from Latin America and West Africa.

Weakness is especially noticeable in areas where buyers are not often Chinese and Indian refiners. During a crucial trading window, the North Sea market, which determines Brent pricing, has experienced significant selling. Bloomberg loading programs predict that in December, loadings of 13 major grades will average roughly 2.1 million barrels per day, an eight-year high.