Murban-Brent Spread Widens as Middle East Disruptions Keep Gulf Crude Supply Tight, Analysts Say
Geopolitical tensions have widened Murban-Brent price spreads, surpassing pre-conflict levels, although they remain below peaks seen at the start of the war, with analysts expecting the spread to narrow only if Middle East hostilities ease.As of about 11.30 a.m. ET on Thursday, Murban crude rose by about 21% to about $108 per barrel, while Brent gained nearly 7% to around $101/bbl.Murban widened its premium over Brent well beyond its pre-conflict relationship, when Murban typically traded near parity levels or at only a modest premium, Naveen Das, senior analyst at Kpler, toldin an emailed response."As of July 23, 2026, Murban surged 19% to above $106/bbl while Brent climbed to $97-100.69/bbl, putting Murban at a roughly $6-9/bbl premium to Brent, a sharp outlier versus the pre-conflict relationship, where Murban typically traded within a few dollars of Brent or at a modest quality premium," Das said.Under a de-escalation scenario, Das said he expects the premium to narrow within one to three weeks if hostilities ease, citing the March 2026 pullback, when Murban dropped 7.28% and Brent fell 9.26% after a single de-escalation signal.However, a prolonged conflict could potentially keep the Murban-Brent spread "structurally wide" or widen it further as Strait of Hormuz transits remain 40% to 50% below pre-conflict levels and more cargoes travel with their automatic identification systems switched off, reducing visible supply.Kpler identified only two meaningful pipeline alternatives if both the Strait of Hormuz and Bab el-Mandeb remain disrupted. Saudi Arabia's East-West Pipeline, also known as Petroline, with capacity of about 5 million b/d, and the UAE's Habshan-Fujairah pipeline, or Adcop, with capacity of roughly 1.5 to 1.8 million b/d."The catch is that Petroline only solves half the problem in this dual-disruption scenario, since Yanbu-loaded cargo bound for Europe still has to run the Bab el-Mandeb/Red Sea gauntlet (or go around the Cape) to get there," Das said, noting that Adcop is considered more "safe."Those routes provide combined bypass capacity of only 6.5 million b/d to 7 million b/d, well below the Gulf's crude and condensate exports of over 17 million b/d to 18 million b/d through Hormuz, while Europe-bound cargoes still face Red Sea risks."We could direct all Red Sea flows via the Mediterranean, but it adds time and costs to transits," the analyst said, adding that he expects "pick up in 'dark transits' which could support the functioning of the two existing bypasses."He added that the likely scenario looks like a return to 2023-2025, when shipping firms routed around the Cape of Good Hope.Kpler expects shipping companies to expand Cape of Good Hope rerouting after crude and product flows around the route climbed to 8.7 million b/d during the first five months of 2024 from an average of 5.9 million b/d in 2023."Given the current disruption spans both chokepoints rather than just one, expect transit-time extensions in that same 10-15+ day range for Gulf-to-Europe cargo, plus new knock-on effects for some Gulf-to-Asia routings that previously threaded both straits," Das said.The longer route could extend Gulf-to-Europe voyages by 10 to 15-plus days or roughly double transit times, while rising war-risk insurance and freight costs continue to lift delivered crude prices, contributing to Brent's roughly 35% to 40% monthly gain, Kpler data showed.Fabian Ng, Argus' head of crude pricing, toldthat Brent traded at a discount to Murban in 2025 as well as in January-February 2026.In 2025, the 4.30 p.m Singapore marker price for front-month ICE Brent futures averaged a $1.53/bbl discount to Murban futures, and a 19 cents/bbl discount in January-February 2026, before the war, Ng said.However, Brent's discount to Murban on Thursday was much wider, although still below earlier peaks. "The discount of $5.82/bbl on 23 July was wider than that of the pre-war average, but below the peak of $10.88/bl discount in March, when Murban prices had spiked directly following the start of the war," Ng said.Ng also expects Murban's premium to narrow if Middle East supply risks ease, under a de-escalation scenario, narrowing Murban's premium over Brent."But under a prolonged disruption scenario, Murban exports from Fujairah will probably retain strong demand, underpinning the grade's value relative to ICE Brent futures," Ng argued.The analyst said Murban exports from Fujairah and Oman crude shipments from Mina al-Fahal remain the Gulf's most insulated export routes.Murban exports from Fujairah reached a record 1.8 million b/d in June, Ng said, citing Kpler data. Oman crude exports averaged over 850,000 b/d in the same month.Sean Lui, Argus' freight specialist, said some Asian buyers are already considering rerouting Saudi crude around the Cape of Good Hope as Red Sea security risks rise, although some Chinese-owned very large crude carriers continue using the route."A switch to the longer route will add roughly 30 days to the journey time, at a minimum," Lui told.This would increase ton-mile demand, tightening tanker supply and lifting freight rates across regional markets.The freight analyst noted that only Saudi-linked vessels currently appear to face direct threats, while ships loading at other Red Sea ports or transiting the area have faced limited disruption despite the deteriorating security environment.Almost no Murban exports transit the Red Sea, Ng said. Most exports depart for Asian markets, and so any halt in flows through the Bab el-Mandeb Strait will only cause "minimal logistical disruptions for Asian buyers."Kpler's Das said Bab el-Mandeb carries only a small share of UAE crude exports, with flows totaling about 17,000 b/d in April, 65,000 b/d in May, 63,000 b/d in June and roughly 39,000 b/d in July.Those shipments represented less than 2%-3% of the UAE's total crude exports of roughly 2.5 million b/d to 3 million b/d, while most Murban cargoes destined for Asia bypass the Red Sea entirely, Das said.Kpler data estimated that combined Middle East crude imports into China, India, South Korea, Japan, Singapore and Thailand fell from about 13.4 million b/d in January to below 7 million b/d in April before partially recovering by July.China's imports alone dropped from more than 5 million b/d in January to roughly 1.4 million b/d to 2.4 million b/d during the worst months, before dark-routing capacity helped restore some lost flows, according to Das.In a normalization scenario, Das said that a verified US-Israel-Iran ceasefire, a Houthi halt to attacks and a recovery in visible Strait of Hormuz traffic would provide the clearest signal for prices to normalize.Murban's premium could narrow within one to three weeks, while Brent and West Texas Intermediate may need four to eight weeks to stabilize, Das added.Argus also expects clear commitments from the US and Iran to end hostilities, restore safe navigation and increase shipping traffic before Brent-Murban spreads and crude prices return to more typical levels.On any signals that Murban-Brent spreads are normalizing, Ng said that, given the uncertainty surrounding broader risks tied to the Middle East, de-escalation would require clear statements from the US and Iran.
