Oil Traders Seize Opportunity Amid Sanctions

January 31, 2025

12:26 PM

Reading time: 3 minutes


Oil traders are making significant moves in the Brent-Dubai spread, a financial contract that bets on the price difference between Middle Eastern crude and global benchmark Brent. This surge in activity comes as U.S. sanctions on Russian oil have forced buyers to look elsewhere for supply, creating a lucrative opportunity for traders.

This week, open interest in the Brent-Dubai contract reached a record high of 448,000 contracts, according to Bloomberg. Dubai crude recently saw its highest premium over Brent in at least a decade, fueled by the growing demand for Middle Eastern oil as buyers scramble for alternatives to Russian oil.

The surge in demand is driving Middle Eastern oil prices up, outpacing crude from other regions. European refiners, who typically source oil from the North Sea or Kazakhstan, are seeing their usual supplies rerouted to Asia. Asian refiners, eager for stable and competitively priced barrels, are snatching up whatever they can find from the Middle East.

For traders, this presents a golden opportunity, thanks to the ongoing sanctions on Russia, U.S. President Trump’s pressure on Canada and OPEC, and the overall unpredictability of global energy flows. As long as sanctions remain and Russian crude remains out of reach for many buyers, expect continued price swings in the global oil market.

In the market, Brent crude prices were up Thursday at $77.17 (+$0.59), as Saudi Arabia reportedly plans to increase its official selling prices to Asia for March, the highest since January 2024. Despite two consecutive weekly declines, crude oil prices are still on track for a monthly gain, with Brent up by 3.6%—the highest gain since June 2024.

Meanwhile, geopolitical tensions remain high, with President Trump threatening to impose tariffs on crude imports from Canada and Mexico starting February 1. Canada exports about 4 million barrels of oil daily to the U.S., while Mexico exports over 700,000 barrels. Analysts expect these developments to further affect global oil supply and prices, as geopolitical risks continue to mount.

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