SINGAPORE: Brent crude's premium to Middle East benchmark Dubai soared above $3 a barrel on Wednesday, market sources said, hitting its highest since late September 2023 according to LSEG data.

Brent's Exchange Futures for Swaps (EFS) to Dubai for August traded at a premium of $3.33 a barrel on Wednesday, three oil brokers said.

The overnight surge in Brent crude and a strong market structure is keeping the EFS supported in recent sessions, said the brokers, who asked to remain unidentified.

Brent crude settled over 4% higher on Tuesday as the Iran-Israel conflict persisted, even as major oil and gas infrastructure and supply have so far been spared from substantial impact.

The premium of the first-month Brent crude futures contract to that for delivery six months later reached its highest in almost two years on Monday. This market structure when near-term prices are higher than later prices, known as backwardation, reflects concerns about supply tightness.

Market participants remained concerned over the risk of supply disruptions in the Strait of Hormuz, through which about one-fifth of the world's seaborne oil flows.

Middle eastern crude benchmarks have also firmed in recent sessions, with Dubai's cash premium reaching its highest in more than two months this week.

The costs of chartering tankers to move oil from the Middle East to Asia have also climbed.

"The EFS spread is being pulled apart by the geopolitical risk and the expectations of greater OPEC exports," said Emril Jamil, a senior oil analyst at LSEG.

"The widening will persist for as long as escalating tension is the default scenario," he added.

(Reporting by Jeslyn Lerh; Editing by Christian Schmollinger)