Oman Crude Surges Amid Hormuz Disruption: Key Impacts for Investors and Oil Traders in Oman
MUSCAT: Oman crude oil prices have surged significantly more than Brent crude this week, driven by disruptions in and around the Strait of Hormuz. This situation has altered regional oil pricing, raised freight and insurance costs, and compelled buyers to pay a premium for barrels perceived as more accessible in open-water markets.
Economist Azza al Habsi from Ominvest highlighted on LinkedIn that Oman crude soared from approximately $68 to $100 per barrel within one week, while Brent crude rose from about $72 to $87. She explains that Oman’s sharper price increase reflects not only the heightened geopolitical risk premium but also specific distortions linked to Gulf crude flows and benchmark pricing mechanisms.
Official figures from the Oman News Agency confirm a steep rise in Oman crude prices: the official price for May delivery was $82.09 per barrel on March 3, increased to $85.93 on March 4, and then surged to $94.47.
Analysts attribute this surge primarily to physical disruptions in shipping through the Strait of Hormuz, a critical global energy chokepoint. Reuters reported a collapse in tanker traffic through the strait, and S&P Global noted that no tankers crossed Hormuz on March 5. Additionally, freight rates for Persian Gulf crude shipments to China have risen sharply as shipowners, traders, and insurers reassess risks in the region.
Another key factor is the way regional crude benchmarks are assessed amid the disruption. Al Habsi pointed out that S&P Global Commodity Insights temporarily excluded crude grades requiring transit through Hormuz from its pricing process. This action has concentrated price formation weight on fewer grades, including Oman crude, amplifying its price response relative to global benchmarks like Brent.
The situation is exacerbated by limited alternative transport capacity. S&P Global estimates that in 2025, around 15 million barrels per day (bpd) of crude and 5 million bpd of oil products passed through Hormuz. Although Saudi Arabia and the UAE have alternative pipelines, they cannot fully compensate for a prolonged closure, tightening supply perceptions across Asia. Reuters reported that Saudi Aramco has increased shipments via the Red Sea route, but this remains insufficient to replace normal Hormuz volumes.
This dynamic particularly affects Asian refiners, many of which are configured to process Middle Eastern crude and face higher costs or operational challenges if forced to switch feedstocks. Reuters noted that Asian refiners are struggling to replace Gulf crude, despite efforts to source alternatives from the United States and elsewhere.
Market observers say these factors have created a premium on barrels that are either more easily delivered or more influential in benchmark pricing. For Oman crude, this has meant outsized gains compared to Brent, even as the wider oil market rises amid fears of further supply disruptions. Barclays has suggested Brent could reach $120 per barrel if tensions continue, underscoring the market’s anxiety.
However, economists warn against interpreting this price spike as a clear benefit for producers. Al Habsi emphasized that any short-term revenue increases are outweighed by broader harm caused by conflict, including inflation, higher transport costs, disrupted supply chains, and greater financial market volatility. Thus, the surge in Oman crude prices serves less as a windfall and more as a warning of severe geopolitical stress affecting the market.
Special Analysis by Omanet | Navigate Oman’s Market
The sharp surge in Oman crude prices, outpacing Brent due to Strait of Hormuz disruptions, highlights significant supply-chain vulnerabilities that could increase operational costs and inflation risks for businesses in Oman. However, this also creates strategic opportunities for investors and entrepreneurs to capitalize on Oman’s elevated crude benchmark status and explore alternative logistics or refining solutions in the region. Smart market players should closely monitor geopolitical developments and consider diversifying supply routes and hedging strategies to mitigate volatility exposure.
