Europe and Mideast crude premiums soar, with few options for buyers

Europe and Mideast crude premiums soar, with few options for buyers

SINGAPORE- Spot premiums for crude oil produced in Europe and the Middle East have rocketed to record highs this month, tracking a rally in global prices as refiners snap up supplies and producers struggle to ramp up output to meet rising demand.

In Asia, refining margins are back at 2018 highs as demand for most oil products has rebounded to pre-pandemic levels or higher. DUB-SIN-REF urn:newsml:reuters.com:*:nL1N2UK10Q

However, most producers in the Organization of the Petroleum Exporting Countries (OPEC) are already short of spare capacity as they play catch-up with the sharp rebound in global fuel consumption.

European refiners concerned about potential sanctions on Russian oil if the Ukraine crisis escalates are seeking oil alternatives from elsewhere in Europe, Africa and the Americas, tightening supplies and pushing North Sea crude premiums to record highs, traders and analysts said.

"It is largely driven by the strength in refinery margins, and specifically the strength in middle distillates," said Warren Patterson, head of commodity research at ING.

"The Russian uncertainty is probably also playing a part, with European refiners hesitant to lock in Russian crude."

While spot premiums for North Sea Brent, Forties and Ekofisk crudes have jumped to record levels, Russian Urals slumped recently to its steepest discount to