LONDON (Dow Jones)–More North Sea Forties crude is set to move to Asia this month, pushing up prices as part of an arbitrage that until December was virtually unheard of.
The unusual movement of oil from West to East has taken significant volumes of crude out of the North Sea in recent months. This has helped drive up the price of Forties, the main benchmark-setting grade for Dated Brent that is used to price the majority of the world’s oil.
The premium that Forties crude commands above benchmark Dated Brent rose Wednesday close to levels not seen since September. Earlier in March, traders said supply was limited thanks to shipments to Asia and the deferral of two cargoes to April.
According to shipping fixtures seen by Dow Jones Newswires Thursday, Royal Dutch Shell PLC (RDSA) chartered the Very Large Crude Carrier, or VLCC, Ioanna to ship 270,000 metric tons of Forties crude from Europe to the South Korean port of Yosu on March 16.
The ship replaces the Marbat, which Shell previously tried unsuccessfully to charter for the same voyage.
Shipments of Forties crude to Asia have become increasingly commonplace in recent months thanks to a narrow price difference between sweet and sour crudes and a free trade agreement between South Korea and Europe that allows buyers to redeem 3% of the price of European crudes.
-By Sarah Kent, Dow Jones Newswires