Kuwait, Iraq follow in Saudi footsteps on oil-price curbs

      Published on Wednesday, 11 March , 2020      955 Views     
Kuwait, Iraq follow in Saudi footsteps on oil-price curbs

  • Gulf News

Top OPEC producers Iraq and the Kuwait followed Saudi Arabia’s lead by cutting pricing for April crude sales, while a reduction by the United Arab Emirates paled in comparison to the kingdom.

Crude’s plunge into the $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 $5 a barrel for April shipments, according to an announcement on Tuesday.

That’s less than the $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 $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. His country is trying to bridge oil producers’ viewpoints to reach a deal to stabilize 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 because the information isn’t public. 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.

Aramco’s lead

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 $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 $1.45 below than Iraq’s Basrah Light to the region. Kuwait’s exports to Northwest Europe were set at a record-low of a $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 $2.10 a barrel discount versus a low of $1.20 last month.

Category Gulf News | 2020/03/11 latest update at 11:00 PM
Source : Arabian Business | Photocredit : Google
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