Iraq Offers Big Discount to Buyers for Importing Basra Oil

SadaNews - According to Reuters, the Iraqi Oil Marketing Company (SOMO) has offered a significant discount on the official selling prices to contracted buyers to attract them to import Basra crude oil from its terminal in the Gulf in July.

The discount for Basra medium crude ranged between $14 and $16 per barrel, while the discount for Basra heavy crude ranged between $16.80 and $18.80 per barrel, according to commercial sources and a document reviewed by Reuters, depending on the loading period.

The discount is larger for shipments loaded between July 1 and 5, shrinking for shipments between July 6 and 10, and again between July 11 and the 31st of the same month.

SOMO has requested buyers to submit their requests for the desired quantity within one day of receiving the letter.

Commercial sources indicated that the large discount might entice buyers, but questions remain about the feasibility of passing through the Strait of Hormuz to bring in the oil.

The daily rental price for a giant oil tanker capable of transporting two million barrels of crude oil from the Middle East to China has risen to around $300,000, up from about $220,000 on February 27 before the U.S. and Israel launched strikes against Iran; however, data from the London Stock Exchange Group indicate that it has decreased from its peak of nearly $600,000 last March.

Last week, SOMO issued a tender to sell crude oil scheduled for loading in July, but another source stated that the company did not receive much interest from buyers due to the difficulties traders faced in booking oil tankers to enter the Gulf.

Other oil producers in the Middle East continue to load oil, but shipping traffic in the Strait has slowed following new attacks on vessels and a resurgence of strikes between the US and Iran in recent days.

Source: Reuters