Refiners retreat from $150 per barrel cargoes amid conflict resolution hopes, collapsing premiums despite Middle East supply risks.
Physical crude premiums have collapsed to near-parity or small discounts against Brent, down from over $30 per barrel in early April. The drop reflects refiners pulling back from nearly $150 per barrel cargo prices as they anticipate a potential resolution to Middle East tensions, not an easing of supply disruptions.
Earlier this year, premiums surged due to fears of prolonged supply constraints from the Hormuz crisis. However, buying behavior shifted in May as refiners bet on de-escalation, despite no material change in supply risks from the region.
The move signals a disconnect between physical market sentiment and geopolitical risks, with refiners prioritizing near-term cost savings over long-term supply security.