Spot Mideast crude prices strengthen after Iran attacks UAE tankers

SINGAPORE/NEW DELHI, July 14 (Reuters) - Prompt Middle East spot crude prices rebounded to higher levels compared with future months as escalating attacks between the U.S. and Iran raised concerns about a disruption to oil exports and shipping through the Strait of Hormuz, industry sources said on Tuesday, prompting Asian buyers to seek alternative supplies. The latest wave of attacks in the five-month-old war started with a U.S. strike on Iran after a ship attack last week. In recent days, the U.S. renewed strikes, while Tehran attacked Gulf nations and ships passing through the Strait of Hormuz near Oman. Iran attacked two Emirati oil tankers, part of Abu Dhabi National Oil Co's (ADNOC's) fleet to shuttle crude out of the Gulf, for transhipments off the United Arab Emirates and Oman for supplies to customers. The latest attack on the tankers is likely to deter shippers from entering the Gulf to load oil, with companies that have already chartered vessels closely monitoring the situation, trade and shipping sources said. It has raised concerns among refiners about whether their cargoes will be delivered in the coming weeks, they added. Prompt monthly spreads for Middle East benchmark Dubai crude flipped into backwardation of nearly $1 a barrel on Tuesday, traders said, after staying in contango for three weeks. Prompt month prices are higher than those in future months in a backwardated market, indicating tight supplies, while contango is the opposite. "There is a possibility that even the UAE will find it difficult to get crude out," said a shipping source in India. "The war premium will go up significantly high. Who will guarantee the safety of vessels? People will not be willing to go in." The sources cited in this article declined to be named publicly as they are not authorised to speak to media. Global crude supplies had improved over the past three weeks after a flurry of tankers passed through the strait amid an interim peace deal between the U.S. and Iran. However, just five oil, chemicals and dry bulkers transited the strait on Monday, mostly using the Iranian route, ship-tracking data from Kpler showed. There were no oil and liquefied natural gas tankers entering the strait. "The mini-glut of oil has now evaporated, with a fresh eye of a potential of disruptions from the Bab el-Mandeb Strait if Houthis are joining the attacks," said June Goh, a senior oil analyst at Sparta Commodities. Yemen's Houthi movement fired missiles at Saudi Arabia on Monday, breaking a four-year truce in the conflict between the kingdom and the Iran-aligned group. ADNOC, which has already committed to sales of more than 70 million barrels of crude between June and August, is expected to tap into its inventories from Fujairah to meet demand, although a slowdown of its shuttle service could mean delays for some cargoes, traders said. The producer is expected to award a tender later this week which could see discounts for its cargoes narrowing and also more demand for cargoes loading in September and October given the latest development, an Indian refining source said. "The situation is fluid (and) uncertain. We cannot plan properly," he added. Asian refiners would have to tap arbitrage supplies from West Africa and Latin America to replace Middle Eastern crude, with Indian buyers set to increase their Russian oil purchases, trade sources said. An Indian refining source said refiners have sufficient inventories for now, but supply could tighten towards September if the disruption lasts 10 to 15 days. The latest round of tensions has also strengthened spot prices and refiners' margins for refined products in Asia. Diesel and jet fuel markets saw prompt monthly spreads and refining margins jump to near two-month highs on Tuesday, while refiner margins for 380-centistoke high-sulphur fuel oil edged higher to a four-week high, LSEG data showed. Asian naphtha crack NAF-SIN-CRK climbed to $184 per metric ton over Brent crude on Tuesday, the highest level since May 19. Tankers carrying fuel oil last transited the strait in early July, with no more visible exits seen after the latest round of attacks, Kpler data showed. Meanwhile, U.S. President Donald Trump said on Monday that the U.S. was reinstating a naval blockade on Iran and would be reimbursed for 20% of all cargo shipped through the Strait of Hormuz after Tehran claimed it had closed the vital waterway. The United Nations' shipping agency said on Monday that it opposes fees on ships passing through maritime waterways, but would await more details. "I believe all of this is posturing and brinkmanship," said Simon Wong, a portfolio manager at Gabelli Funds, in an email.

Spot Mideast crude prices strengthen after Iran attacks UAE tankers

Prompt Dubai spreads flip into backwardation

Shipping concerns rise as Gulf traffic slows

ADNOC sales, Asian refinery margins and alternative supply

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