Asian crude buyers shift to smaller tankers as record shipping costs distort global benchmarks

Asian crude buyers are turning to smaller tankers, delivered-basis purchases, and long-term charters as a global shipping crisis ties up supertankers and shuts the U.S. Gulf Coast arbitrage to Asia. Soaring transport costs have heavily distorted physical price differentials, pushing Dated Brent and Norway's Johan Sverdrup to record premiums of $20 and $24 per barrel over Brent, respectively, while West African grades trade at discounts down to minus $20 per barrel. The disruption follows an early October freight rate surge to around $36 per barrel for Middle East-to-Asia routes, which pushed Asian medium sour refining margins negative in September.