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Iran is reportedly delaying the sale of its new heavy oil grade by several months as the country works out a marketing plan, news agencies citied Iranian oil officials as saying.
Set to boost production by 500,000 barrels per day, with the new heavy grade expected to see a boost in volumes this spring, the new plan is to start selling in June.Related: Storage Problems Could Cause A Rout In Oil Prices
Officials from the National Iranian Oil Company (NIOC) have reportedly cited as reasons for the delay the decision to allow customers more time to test the new heavy grade in their refineries, and incomplete work on a marketing plan for the new crude.
The new heavy grade will have a separate price, according to reports, and it was originally slated to be released into the market in March.
The new heavy oil grade will be sourced from the Yadavaran, South Azadegan and north Azadegan oil fields in the West Karoun region near the border with Iraq, where Iranian officials are eyeing a potential 1 million barrels in daily production once expansion plans are completed.
According to Bloomberg, the new grade will likely compete with Iraq’s Basrah Heavy crude for buyers in Asia. This means that Iran’s pricing will have to keep this in mind and come in under the Iraqi crude blend price.Related: The Billion Dollar Biofuel That Fell 2.7 Billion Gallons Short
Earlier this month, Iran released prices for one of its existing main grades, Iran Heavy, for Europe. The cost will come in at $1.25 per barrel less than a comparative Saudi blend, Bloomberg reported.
The news is potentially good for the ongoing global supply glut.
It remains unclear if this decision is related to efforts to get major producers on board to freeze output at January levels—an idea that Iran supports but has not committed to itself as it seeks to raise production to pre-sanction levels.
By Charles Kennedy of Oilprice.com
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Charles is a writer for Oilprice.com