OPEC+ expects to increase production by 2 million barrels, which has dealt a heavy blow to the market. Middle Eastern oil prices are expected to fall below Brent for the first time by the end of 2024.

Due to the prospect of increased supply from OPEC+, the sale of crude oil in the Middle East region has led to a sharp drop in oil prices. Data shows that the price of Oman crude oil on the Gulf Commodities Exchange fell below Brent crude oil prices on Tuesday, marking the first time since the end of 2024. This signals the end of the longest premium period for Middle East oil prices since 2023. This week, OPEC+ announced a phased resumption of production starting in April, which shook the global oil market. This decision goes against the expectations of most analysts, and over time, OPEC+ supply could increase by over 200 million barrels. This shift has led to a general decline in futures prices, exacerbating investor concerns in dealing with escalating trade tensions. Traders point out that concerns over oversupply have been triggered by potential changes in OPEC+ supply plans and the harsh sanctions imposed by the United States on Russia. Meanwhile, despite some obstacles, sensitive crude oil supplies from Iran and Russia continue to flow to Chinese customers. The key price difference used to measure the health of the Dubai benchmark oil price in the region has also seen a decline. Data from brokerage firm PVM Oil Associates Ltd. shows that the spread between the second month and third month contracts narrowed to just 38 cents on Tuesday, compared to $2.55 at the end of January. This indicates that concerns about supply tightness are easing, and it also shows that the massive premiums that appeared in the Middle East market earlier this year after US sanctions on Russian and Iranian oil did not persist. At that time, the Middle East region was scrambling to buy alternative crude oil, resulting in the largest price increase in years for some oil-producing countries in the region. However, that rally was not sustainable, and these contracts have now become the most actively traded contracts, exacerbating the recent downward trend. The impact of weaker time spreads on Dubai crude prices is greater than on Brent crude prices, leading to the spread between London and Middle East oil prices (EFS) widening from 31 cents per barrel to 84 cents per barrel last week. Analyst Neil Crosby of Sparta Commodities noted that these moves have forced the arbitrage window from Europe and the US to Asia to "close."