Iraq increased its July official selling price (OSP) for Basra Light crude to Asia as expected, but a steeper than expected hike for Basra Heavy could weigh on the new grade.
Iraq set the July OSP for Basra Light crude to Asia at minus $1.60 a barrel against the average of Oman/Dubai quotes, up 95 cents from the previous month, the State Oil Marketing Organization (Somo) said.
The price increase widens the gap with Saudi Arabia’s Arab Medium slightly, although traders said the Basra Light price for July was mostly within expectations following strong demand for the grade last month.
The discount for the new Basra Heavy grade to Asia in July was set at $5.60 a barrel to Oman/Dubai quotes, Somo said, up 85 cents from the previous month.
Iraq has had mixed success splitting exports from its southern terminals into two crude streams, with spot differentials for Basra Heavy falling to a steep discount amid uncertainties over quality and higher than expected loading volumes.
Somo raised its prices following a steep increase in the OSP for Arab Heavy, but some traders said the Basra Heavy hike exceeded expectations.
The increase could put pressure on spot differentials for July Basra Heavy, with one trader saying they could widen further to a discount of more than $2 a barrel.
The July Basra Light OSP to the North and South American markets was unchanged at Argus Sour Crude Index (ASCI) minus $0.15 a barrel and the price of Kirkuk to the US increased to ASCI plus $0.75 a barrel.
For Europe, the July OSP for Basra Light fell by $0.15 to dated Brent minus $4.60 a barrel and the July Kirkuk OSP rose to minus $4.25.
Source: Trade Arabia