Iraq’s state oil marketer offered buyers contractual crude supplies for October at discounts of as much as $37 a barrel to regional benchmarks, according to a document obtained by Bloomberg.
The price reduction shows how Iraq has struggled more than some of its neighbors when it comes to shipping during the Middle East war, due to its geographic position further from the Strait of Hormuz. Lacking its own significant fleet, Baghdad is resorting to steep discounts to incentivize buyers to keep barrels moving through the Persian Gulf despite the continued risks to vessels.
Iraq’s SOMO offered Basrah Medium at a discount of $34.50 a barrel and Basrah Heavy at $37 a barrel below the benchmark, which depends on the destination of the exports. The document, dated Sept. 29, covers loadings from Oct. 1 through Oct. 31.
SOMO didn’t respond to a request for comment outside normal business hours.
For Asian destinations, the benchmark is the average of Oman and Dubai crude prices. European cargoes are priced against Dated Brent, while shipments to North and South America use the Argus Sour Crude Index.
In August and September, the discounts offered by SOMO were below $30 a barrel.
Competition among Persian Gulf nations to sell their oil has meant some companies that were previously lifting Iraqi crude turned to others that were offering deeper discounts, SOMO’s chief Ali Nizar said on Sept. 20, according to a video on the Iraqi parliament’s official YouTube channel.
Crude buyers are also grappling with the soaring cost of moving oil around the world driven by a shortage of available supertankers, which has made some trades uneconomical.
source: rigzone,com