Iraq cut its official sales prices for Basra crude globally in February as refining profits fell, prices fell on the spot market and as other producers in the Middle East slashed official selling prices for their competing materials.
The Iraqi oil marketing company (SOMO) said on Thursday that Iraq has reduced the official sale price of Basra light crude in February shipments to Asia, 30 cents from the previous month to become a discount of five cents a barrel than the average prices of Oman and Dubai.
Commercial data showed that this was the biggest discount in the price of Basra light crude compared with the average Arab crude produced by Saudi Arabia since November 2016.
Sumo said in a e-mail statement that Basra heavy crude destined for Asia was scheduled to be priced in the same month at a discount of $ 3.75 a barrel from the Oman and Dubai bourses.
Iraq is OPEC’s second largest oil producer and sells most of its crude oil to Asian buyers.
Somo is likely to have cut official selling prices as market demand has fallen on Basra’s light and heavy bunkers.
Last month, Sumo offered February crude and light crude shipments through bids on the Dubai Mercantile Exchange (DME) but did not receive any offers, indicating that the market is valuing crude at prices below their official selling prices.
A February crude oil trader in Singapore said the value of light crude for February delivery would likely remain at a price cut as a drop in fuel oil margins put pressure on medium and heavy crude prices.
Saudi Arabia, OPEC’s largest producer and exporter of crude oil, cut February prices for its equivalent of light and heavy Basra. It was decided to reduce the prices of the sale of medium and heavy Arab crude to Asia by 20 cents per barrel each.
Iraq is pumping more crude into the market as exports from the south increase to 3.535 million bpd in December to offset lower exports from the north.
The official sale price of Basrah Light crude in shipments to North and South America was 50 cents per barrel below the Argos high-sulfur crude, down from the previous month. The price of Kirkuk crude for the US fell to 55 cents a barrel above the same index.
For shipments to Europe, the price of Basra light crude for February was cut by 10 cents to Brent, below $ 3.15 a barrel, while the official sale price for Kirkuk crude was set at $ 2.80 less than Brent.