• 4 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 7 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 11 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 15 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 8 hours Apartheid Is Still There: Post-apartheid South Africa Is World’s Most Unequal Country
  • 11 hours Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 12 hours Total nonsense in climate debate
  • 12 mins Theresa May to Step Down
  • 50 mins Visualizing How Much Oil Is In An Electric Vehicle (Hint: a heckuva lot)
  • 12 hours IRAN makes threats, rattles sabre . . . . U.S. makes threats, rattles sabre . . . . IRAQ steps up and plays the mediator. THIS ALLOWS BOTH SIDES TO "SAVE FACE". Then serious negotiations start.
  • 2 hours Look at the LONGER TERM bigger picture of international oil & gas. Ignore temporary hiccups.
  • 15 hours Will Canada drop Liberals, vote in Conservatives?
  • 1 day IMO 2020 could create fierce competition for scarce water resources
  • 2 days Level-Headed Analysis of the Future of U.S. Shale Oil Industry
  • 11 hours Apple Boycott in China
  • 7 hours Australian Voters Reject 'Climate Change' Politicians
  • 15 hours Canada's Uncivil Oil War : 78% of Voters Cite *Energy* as the Top Issue
Tainted Russian Oil Crisis May Drag On For Months

Tainted Russian Oil Crisis May Drag On For Months

Russia could have seriously underestimated…

The Single Most Bullish Indicator For Oil

The Single Most Bullish Indicator For Oil

Crude futures saw some headwinds…

Iraq’s Plan To Change Oil Pricing For Asia Faces Resistance

Oil

Buyers do not support Iraq’s plan to change the way it prices its Basra crude for the Asian markets, because longer lead times between pricing and delivery would make it more difficult to hedge against price changes, Reuters reported on Friday, citing sources and market analysts.  

In a bid to increase oil revenues and possibly setting the stage for its own benchmark crude grade, Iraq told customers earlier this week that it might change the way it prices Basra crude for the Asian market. According to a letter by Iraq’s state oil marketing company SOMO, seen by Reuters, the company is asking customers for input by August 31 regarding the plan to change the Basra crude pricing for Asia to Dubai Mercantile Exchange (DME) Oman futures beginning next year, dropping the average of Oman and Dubai quotes by S&P Global Platts.

The Iraqi plan was seen as a breakaway move from the leading Middle Eastern exporter, Saudi Arabia, whose official selling prices (OSP)—using S&P price assessments for decades—are usually followed by the other main producers in the region. 

Iraq’s new pricing method would use the monthly average of DME Oman futures two months before the loadings, which means that if a loading is scheduled for October, it would use the August futures contracts. Buyers would know only in the middle of September if they had successfully bid for the cargo, which would leave them little time to hedge against price changes.

Other Middle Eastern exporters, including Saudi Arabia, price the crudes based on the loading month.

According to traders who spoke to Reuters, the lag time in pricing and loading would also make it difficult to compare the prices of crude grades.

Related: Kurdish Independence Could Deal A Major Blow To Oil Markets

Commodity analysts see the plan as a very significant change in pricing—and one that will be closely watched—but which they described as “very ambitious” and very hard technically to implement.

“Moving right away to DME Oman is very ambitious. I think it will cause a few hiccups because technically it’s going to be very hard,” Adi Imsirovic of Britain’s Surrey University Energy Economics Centre, told Reuters.  

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News