Iraq will adopt a new crude-oil benchmark for its Asian exports, Reuters reports.
Iraq’s Oil Marketing Company (SOMO) announced to its customers that it will cease using the average of Platts’ Oman-Dubai prices to set its Asian prices and will instead rely upon DME Oman futures. This change will take effect in January 2018, according to sources interviewed by Zawya.
The switch to DME Oman futures will place Iraq, OPEC’s second-biggest oil producer, on an independent trajectory. Regional oil-producing giants, such as Saudi Arabia, Kuwait, and Iran, base their prices on the price assessments of S&P Global Platts, Zawya reports.
The pricing decision applies to approximately two million barrels of crude per day (b/d), approximately two-thirds of Iraq’s exports from Basra, according to Zawya.
Iraq has been selling occasional cargoes of crude through the DME since April to assess the market, Reuters reports.
An industry source told Reuters that “[l]ately they (the Iraqis) have managed to achieve good premiums via the DME action, so there is some added value.”
SOMO is responsible for negotiating and selling Iraqi crude oil on the international market.