Iraq Offers Deep Crude Discounts

Iraq Offers Deep Crude DiscountsIraq Offers Deep Crude Discounts

Iraq will sell its Basrah Light crude next month to customers in Asia at the steepest discount in at least 11 years, following Saudi Arabia’s lead as Middle East producers seek to defend market share.

Basrah Light, a high-sulfur oil used by refiners including China Petroleum & Chemical Corp., was set at $4 a barrel below the average of Middle East benchmark Oman and Dubai grades, according to a statement from Iraq’s Oil Marketing Co. cited by Bloomberg. The official selling price to US buyers was cut by 30 cents compared with December, while shipments to Europe were marked up by 10 cents.

Iraq is reducing export prices to Asia after a similar move by Saudi Arabia last week. The two nations are the biggest members in the Organization of Petroleum Exporting Countries, which decided against cutting its production quota at a Nov. 27 meeting even as the highest US output in three decades is seen exacerbating a global glut.

Saudi Arabian Oil Co. reduced its January price for Arab Light sales to Asia to $2 a barrel below the Oman-Dubai average. That’s the widest discount since June 2000 when Bloomberg began compiling the data. Its Arab Medium grade, which National Iranian Oil Co. and Kuwait Petroleum Corp. have followed in the past, was cut by $1.85 from December.

Middle East producers form half of OPEC’s 12 members, which collectively supply about 40 percent of the world’s oil. Iraq ships Basrah Light from its oil terminal in the Persian Gulf and also exports Kirkuk crude to US and European markets mainly via the Turkish Mediterranean port of Ceyhan.