Iraq, Kuwait curb oil prices


State-run Aramco, the world’s biggest exporter, known officially as Saudi Arabian Oil Co, fired the first salvos by slashing pricing for its crude and saying it would flood the market with a quarter more oil in April.

DUBAI: Top Organisation of Petroleum Exporting Countries (Opec) producers Iraq and Kuwait followed Saudi Arabia’s lead by cutting pricing for April crude sales, while a reduction by the United Arab Emirates (UAE) paled in comparison to the kingdom.

Crude’s plunge into the US$30s this week is causing upheaval well beyond oil markets, as the price war between Saudi Arabia and Russia threatens budgets in producing countries and hammers market values of listed energy companies.

State-run Aramco, the world’s biggest exporter, known officially as Saudi Arabian Oil Co, fired the first salvos by slashing pricing for its crude and saying it would flood the market with a quarter more oil in April.

Iraq cut the official selling price for its Basrah Light crude for buyers in Asia by US$5 a barrel for April shipments, according to an announcement on Tuesday. That’s less than the US$6 reduction for Aramco’s comparable Arab Medium grade. Kuwait reduced its selling price to Asian customers by the same as the Saudis.

The UAE, the only major producer that still sets prices retroactively, lowered the cost of its four grades for February sales by US$1.63 a barrel from January. However, its benchmark Murban crude is being sold at a deeper discount in the spot market. All three producers ship a large portion of their exports to Asia.

By not pricing its crude as cheaply as Aramco’s, Iraq may prevent fanning the flames of the Saudi-Russian dispute. “Any price war to acquire the largest market share does not serve the interests of the producing countries, ” Iraqi Oil Ministry spokesman Asim Jihad said Tuesday. Iraq is trying to bridge oil producers’ viewpoints to reach a deal to stabilise and rebalance markets, he said in a statement.

Iraq’s state oil-marketing company, SOMO, plans to increase exports in April, according to a person with knowledge of the matter, who asked not to be identified.

Shipments from the country’s southern port of Basra and oil that SOMO ships by pipeline through Turkey will rise to 3.6 million to 3.7 million barrels a day, the person said. SOMO sold 3.44 million barrels daily in March, according to Bloomberg tanker tracking data.

Middle Eastern producers sell much of their oil under long-term contracts, setting what are known as official selling prices, or OSPs, to let customers know what they’ll pay for future cargoes.

Other Persian Gulf producers often follow Aramco’s pricing lead. Kuwait set its April export crude OSP for Asian customers at a US$4.65 a barrel discount to the regional benchmark, according to a price list seen by Bloomberg. That’s 60 cents lower than Aramco’s Arab Medium and US$1.45 below than Iraq’s Basrah Light to the region.

Kuwait’s exports to north-west Europe were set at a record-low of a US$12.60 discount. The UAE’s Abu Dhabi National Oil Co has “always set a fair and reasonable retroactive price for its crude that is consistent with market conditions, ” Adnoc said in a statement Tuesday. The state-owned company is likely to change its pricing method when it introduces Murban futures later this year.

Murban crude to be loaded in May traded in bigger discounts in the spot market, with a cargo trading as low as US$2.10 a barrel discount versus a low of US$1.20 last month. — Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

oil , price , cut , Saudi Arabia , Iraq , Kuwait , Opec ,

   

Next In Business

TDM says CEO Zainal Abidin resigned over disagreement with chairman�
Petronas posts RM3.4bil net loss in Q3
Boustead appoints former Telekom boss Shazalli Ramly as new Group MD
Public Bank 3Q net profit higher at RM1.39b
CIMB's 3Q pre-tax profit improves sequentially on higher operating income
Kenanga IB profit up tenfold as brokerage, trading income soar
Palm oil’s stunning rally is set to boost supermarket prices
Alliance Bank posts lower 2Q net profit of RM103.94m on higher reserves
Pandemic and travel curbs hit Datasonic Q2 earnings�
Higher net profit for Hong Leong Bank

Stories You'll Enjoy