Middle East geopolitical premium rises significantly, with Dubai spot premiums soaring to a six-week high as Red Sea blockade threats prompt concerns over supply disruptions.

(1) On Tuesday, Middle Eastern crude oil benchmark spot premiums surged to the highest level in about six weeks, with both Dubai and Murban crude prices rising by nearly $3 per barrel. This comes after Yemen's Houthi forces announced a maritime blockade against Saudi Arabia, prompting a market repricing of the security of critical transport routes. (2) According to analysis agencies, if passage through the Strait of Mandeb is disrupted, over 4.5 million barrels of oil and fuel exported daily from Saudi Arabia’s Yanbu port would be forced to reroute around the Cape of Good Hope. About 70% of these shipments head to Asia, and a journey extension of about one month would create a logistics bottleneck. Furthermore, very large crude carriers are unable to transit the Suez Canal, imposing a natural limit on alternative transportation capacity. (3) Geopolitical risks are beginning to affect actual trade flows. Sources reveal that two state-owned Indian oil refiners have cancelled plans to load crude oil at Iraq’s Basra port, mainly due to concerns over the safety of navigation through the Strait of Hormuz. (4) Spot market data confirms the tense situation, with the premium of Dubai spot crude relative to swap contracts rising by around $2.26 to $3.00 per barrel, reflecting the rapid pricing-in of a risk premium for immediate supply availability.