An Iranian oil tanker (file photo)[/caption]Iranis said to be offering its main crude grade to customers in Asia at the deepest discount in 14 years, taking a cue fromSaudi Arabiain trimming price differentials.
National Iranian Oil Co. cut its official selling price for January shipments oflight crudeto Asia to a discount of $1.80 a barrel below the regional benchmark as Middle Eastern producers vie to keep selling in the region, according to four people with knowledge of the decision. An official at NIOCs crude-marketing department in Tehran declined to comment.
Iran cut the differential to a discount from a premium of 13 cents a barrel to the average of the Oman and Dubai benchmark crudes for December. The light crude grade hasnt sold at such a steep discount since Bloomberg began tracking the countrys official selling prices in March 2000.
Oil priceshave collapsed since the Organization of Petroleum Exporting Countries decided on Nov. 27 to maintain its output target, fanning speculation that Saudi Arabia and other members are determined to make North American shale drillers and other producers share the burden of reducing oversupply. Saudi Arabias state oil company prompted speculation that the kingdom was seeking to preserve market share when it lowered prices for November.
Expanding supplies from North American shale deposits coupled with weakening demand growth inChina, the worlds second-largest oil consumer, helped push crude into abear marketthis year. Middle Eastern producers are increasingly competing with cargoes fromLatin America, North Africa andRussiafor buyers in Asia.
Arab Light
Saudi Arabian Oil Co. lowered the official selling price for itsArab Light grade to Asianext month to $2 a barrel less than a regional benchmark, the company said by e-mail Dec. 4, marking the biggest discount since Bloomberg began compiling data in June 2000. Saudi Aramco, as the company is known, cut all differentials in January for buyers in Asia and the U.S. and raised them for customers inEurope.
Fellow OPEC members Iraq and Kuwait also cut selling prices to Asia, on Dec. 8 and Dec. 10, respectively.
Iran deepened the discount forIran Heavy crudeto $3.51 a barrel for January sales to buyers in Asia, compared with a $1.66 discount for December, according to the people, who asked not to be identified since the pricing information is confidential. That cut puts Irans heavy crude at the deepest discount December 2008.
Saudi Aramcoset the discount for its comparable Arab Medium crude at the deepest level since December 2008.
By Bloomberg
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