Oil price benchmarks are defying the laws of supply and demand
The general laws of economics aren’t being reflected in the oilNSE 0.00 % market’s major benchmarks for now.
US sanctions on Venezuelan and Iranian oil as well as output cuts by the Saudi Arabia-led OPEC+ group are creating a shortage of heavy to medium “sour” crude that’s sulfurous and dense. Meanwhile, the American shale boom is generating ample shipments of cleaner and lighter “sweet” supply in the market.
So it stands to reason that prices of scarce sour crude — reflected in the Dubai oil benchmark — should gain versus the Brent marker, which represents sweet supplies. Yet the opposite is occurring. A gauge of strength between the two shows the Middle East oil is at its weakest level since December.
