Iran has set its June official selling prices (OSPs) for heavier crude grades it sells to Asia at the biggest discounts to Saudi and Iraqi oil since 2007-2008, raising the stakes in its fight to regain market share.
This is third time Iran has changed price formulas since January, underscoring its need for competitive pricing to push more exports into Asia after international sanctions against it were lifted early in the year.
In contrast, top OPEC producer Saudi Arabia raised its June OSPs for all grades to multi-month highs, outstripping forecasts. Saudi Aramco’s chief executive has said demand for the kingdom’s oil is increasing.
Iran on Tuesday set the June OSP for Iranian Heavy crude at $1.60 a barrel below the Oman/Dubai average, up $1 from the previous month, an industry source with direct knowledge of the matter said.
This still puts Iranian Heavy at 30 cents a barrel below Saudi’s Arab Medium grade, the biggest discount between the two crudes since 2007, trade data showed.
Against Iraq’s flagship Basra Light, Iranian Heavy is 20 cents a barrel cheaper, the widest gap since 2012, the year that sanctions hit Iran’s oil exports.
Tehran typically adjusts its crude price formulas to Asia at the beginning of each quarter following negotiations with its clients. However, this year it has changed at least some of its crude pricing formulas in March, April and June.
The changes helped to boost its exports to Asia by 50 percent in March from a year ago even though lingering sanctions posed difficulties for buyers in paying for and shipping Iranian oil.
The June OSP for Forozan Blend has also fallen to the largest discount against Arab Medium since the fourth quarter of 2008, data showed.
Iranian Light remained at 25 cents a barrel above Arab Light in June, or $0.50 above the Oman/Dubai average.
The table below shows Iran’s June crude prices to Asia as differentials to the Oman/Dubai average.
The price for Soroush is quoted as a differential to Iranian Heavy. All prices are in U.S. dollars.
GRADE JUNE MAY CHANGE
IRANIAN LIGHT +0.50 -0.60 +1.10
IRANIAN HEAVY -1.60 -2.60 +1.00
FOROZAN -1.40 -2.43 +1.03
SOROUSH IH -5.60 IH -5.65 +0.05