Jul 28, 2025
Johan Sverdrup's production is declining as loaders at the end of August face challenges.
Norway's Johan Sverdrup crude dropped to a two-month low on July 24, continuing its decline amid expectations for further weakness. Market participants noted a bearish environment as alternative grades reduced demand prospects and a backwardated Brent complex penalized immediate loaders.
Platts assessed Johan Sverdrup FOB Mongstad at an 88 cents/b premium to Dated Brent on July 24, marking its lowest value and the first time it fell below the $1/b threshold since May 21.
The differential has decreased by over $2/b during the pricing sessions from July 10-24, indicating a significant shift in fortunes for this medium sour grade due to weakened demand.
Throughout the week, little interest was observed in offers around the $1.20/b mark for third-decade FOB August loaders during afternoon European trading. Unipec offered a Johan Sverdrup cargo on a CIF Rotterdam basis for arrival between Aug. 23-27 during the July 24 MOC session, marking the first indication of this Norwegian grade in the Platts Market on Close assessment process, which remained at a $2/b premium to Dated Brent.
A source remarked that the third decade might be too long and predicted pressure on differentials, explaining the lack of buyers for the Unipec cargo.
Despite heavy supply for third-decade August cargoes, traders agreed that differentials are in a contango structure, indicating further pressure on the second decade, as first-decade loaders have mostly cleared.
"The prompter is even lower, with a general overhang," said a second source, estimating the value for second-decade loaders below the $1/b mark. "Most shorts are covered for that period."
A third source noted that a contango structure is understandable given the pressure on both Johan Sverdrup and Guyana crudes, which are often seen as close alternatives. "I think differentials still need to decrease."
The sudden shift in demand, particularly during bitumen season, caused confusion when Johan Sverdrup differentials began to falter, with participants noticing a significant divergence in indicative values during the week of July 18.
Current sentiment revolves around the increased availability of alternative grades from Latin America and a strong backwardation structure across the Brent paper complex, which has contributed to the lack of buyers.
"JS can be tricky to analyze, but typically it reflects JS becoming too expensive, prompting quick shifts to alternative barrels," the second source noted.
Previously, limited alternative availability on the prompt had contributed to Johan Sverdrup differentials rising above the $3/b mark in a bullish trend from June to mid-July. This extended period allowed participants to arrange flows of trans-Atlantic medium sour grades into Europe, even with longer trading cycles.
"Fundamentals haven't shifted; it's challenging for grades to trade at high premiums when the Dated structure is so strong," stated a fourth source, referencing the North Sea Dated strip's backwardation, which has decreased from a three-month high on July 18.
"JS rallied due to a tight period, leading to ahead purchases, but prompt cargoes faced challenges because of the Dated structure," the fourth source added.
As Johan Sverdrup searches for stability, the sweet-sour spread within the North Sea complex is widening, even with sweet counterpart Ekofisk under unusual pressure. On July 24, Johan Sverdrup was assessed at a 99.5 cents/b discount to Ekofisk, its widest discount since May 21.
Platts assessed Johan Sverdrup FOB Mongstad at an 88 cents/b premium to Dated Brent on July 24, marking its lowest value and the first time it fell below the $1/b threshold since May 21.
The differential has decreased by over $2/b during the pricing sessions from July 10-24, indicating a significant shift in fortunes for this medium sour grade due to weakened demand.
Throughout the week, little interest was observed in offers around the $1.20/b mark for third-decade FOB August loaders during afternoon European trading. Unipec offered a Johan Sverdrup cargo on a CIF Rotterdam basis for arrival between Aug. 23-27 during the July 24 MOC session, marking the first indication of this Norwegian grade in the Platts Market on Close assessment process, which remained at a $2/b premium to Dated Brent.
A source remarked that the third decade might be too long and predicted pressure on differentials, explaining the lack of buyers for the Unipec cargo.
Despite heavy supply for third-decade August cargoes, traders agreed that differentials are in a contango structure, indicating further pressure on the second decade, as first-decade loaders have mostly cleared.
"The prompter is even lower, with a general overhang," said a second source, estimating the value for second-decade loaders below the $1/b mark. "Most shorts are covered for that period."
A third source noted that a contango structure is understandable given the pressure on both Johan Sverdrup and Guyana crudes, which are often seen as close alternatives. "I think differentials still need to decrease."
The sudden shift in demand, particularly during bitumen season, caused confusion when Johan Sverdrup differentials began to falter, with participants noticing a significant divergence in indicative values during the week of July 18.
Current sentiment revolves around the increased availability of alternative grades from Latin America and a strong backwardation structure across the Brent paper complex, which has contributed to the lack of buyers.
"JS can be tricky to analyze, but typically it reflects JS becoming too expensive, prompting quick shifts to alternative barrels," the second source noted.
Previously, limited alternative availability on the prompt had contributed to Johan Sverdrup differentials rising above the $3/b mark in a bullish trend from June to mid-July. This extended period allowed participants to arrange flows of trans-Atlantic medium sour grades into Europe, even with longer trading cycles.
"Fundamentals haven't shifted; it's challenging for grades to trade at high premiums when the Dated structure is so strong," stated a fourth source, referencing the North Sea Dated strip's backwardation, which has decreased from a three-month high on July 18.
"JS rallied due to a tight period, leading to ahead purchases, but prompt cargoes faced challenges because of the Dated structure," the fourth source added.
As Johan Sverdrup searches for stability, the sweet-sour spread within the North Sea complex is widening, even with sweet counterpart Ekofisk under unusual pressure. On July 24, Johan Sverdrup was assessed at a 99.5 cents/b discount to Ekofisk, its widest discount since May 21.