[SNSUC Crude Watch] Medium at Parity, Heavy -$3.30; Oct Term Discounts Deepen to -$34.50/-$37.00 as US-Iran Direct Strikes Lift War Risk to 8×

Oct 6 saw Brent settle at $91.45 (-2.97%) and WTI at $88.20 (-3.40%), both easing. SOMO held the Oct Asia OSP at Basrah Medium parity / Heavy -$3.30, yet Oct term discounts deepened to -$34.50/-$37.00. Overnight US-Iran direct strikes at Hormuz lifted the war-risk premium to 8× peacetime.

2026-10-06· 5 min· By: SNSUC Research Institute

1. Official Selling Price (OSP) Layer

SOMO set the October Asia OSP on Sep 13 and held it unchanged: Basrah Medium at parity (+$0.00/bbl) to the Oman/Dubai average, and Basrah Heavy at -$3.30/bbl. Versus September (Medium -$4.00, Heavy -$7.30), both tightened by $4.00 — a stable reading after two consecutive months of upward revision.

2. Spot Discount (Term Rebate) Layer

Per a Reuters-disclosed document dated Sep 29, October-loading (Oct 1–31) term cargoes carry rebates deepened to Medium -$34.50 and Heavy -$37.00/bbl (FOB Basrah terminal / SPM) against destination benchmarks — wider than the <-$30/bbl seen for Aug–Sep loadings, as buyers absorb Hormuz-lift freight and risk costs via discounts.

3. Load Premium +30% Mechanism

Non-Hormuz load premiums (days 1–10 ≥ $0.20, days 11–30 ≥ $3.00/bbl) plus roughly +30% offshore STS transfer premium are the upside to delivered cost; yet after term rebates and war risk, spot net remains deeply discounted.

4. Net-to-Hand Differential Estimate

For Medium: OSP +$0.00 plus term rebate -$34.50 = net FOB ≈ -$34.50/bbl vs Oman/Dubai; Heavy -$3.30 + (-$37.00) = net -$40.30/bbl. Adding elevated VLCC spot freight (TD3C high) and up to ~$2.5M war-risk per voyage, delivered net is further eroded — buyers' effective to-hand price is deeper.

5. Practical Notes

Overnight (Oct 6) the US and Iran exchanged direct strikes at Hormuz: Iran downed a US Apache helicopter and the US launched three waves of precision strikes on IRGC naval command hubs on Qeshm Island, Sirik, Jask and Bandar Abbas; Iran retaliated against US bases in Bahrain, Kuwait and Jordan, spilling the conflict regionally. Yet Asian oil prices rose only ~1% briefly before easing, with Brent/WTI closing at 91.45/88.20 (-2.97%/-3.40%). The Lloyd's JWC still lists the Arabian Gulf as a war zone; war-risk premium stands at 8.0× peacetime, with single VLCC voyages up to ~$2.5M (vs ~$125k peacetime). US commercial crude inventories fell for an eighth straight week (API -9.12 million barrels).

Sources: Reuters / Shafaq / Bloomberg (Argus-sourced) / Kpler / straits.live / XTB / Jin10.

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