Iraqi Price Revisions Expected To Meet Approval
The U.N. oil overseers have recommended that the Iraqi sanctions committee grant Iraqi state oil marketer SOMO’s request for revisions of its March crude sales prices, diplomats said on March 6th.
SOMO had on March 2nd proposed cutting the price for March sales of its Kirkuk grade crude to Europe by 40 cents a barrel to Dated Brent minus $4.70 a barrel.
Iraq has also asked that the price of exports of its Basrah Light crude to the U.S. be raised by 10 cents a barrel to second-month West Texas Intermediate (WTI) minus $9.55 a barrel.
In addition, SOMO requested that March Kirkuk sales to the U.S. be increased by 10 cents a barrel to first-month WTI minus $8.60 a barrel.
Prices for Basrah Light shipments to the Far East have already been set at the average of the Oman and Dubai benchmark crudes minus 40 cents, while Basrah Light prices for Europe were established at Dated Brent minus $5.00.
Unless the sanctions committee has any objections to the proposed price revisions, the new rates will be approved on March 7th. Industry sources indicated on March 5th that Iraqi crude exports could top 1.5 million b/d in March, largely due to the reduced sales prices.
SOMO’s March sales program had suggested an even higher target of 2 million b/d, but lagging Kirkuk exports in the period from March 1st-10th will likely result in a lower flow rate.
The predicted volume increase for March comes despite industry reports that Baghdad has not given up on its demand that buyers pay a per-barrel surcharge outside of the U.N. oil-for-food program.
Industry officials have indicated that the surcharge fee is 25 cents a barrel for sales to Europe and 30 cents a barrel on exports to the U.S. and Asia.
© 2001 Mena Report (www.menareport.com)