A market share battle
between Russia and Opec oil producers in Europe is intensifying as Iraq has overtaken Saudi Arabia as the second largest seller there and Iran has already lined up buyers for its crude for when sanctions are lifted.
The International Energy Agency cited market sources on Friday as saying Tehran would be able to sell at least an extra 400,000 barrels per day (bpd) to buyers in Asia and Europe when the sanctions are lifted.
Customers would include refiners in Italy, Greece and Spain who prefer to use Iranian crude as their baseload feedstock.
"For this reason, producers are likely to grow still more competitive on pricing," the IEA said.
The shift opened opportunities for rivals in the European markets, traditionally dominated by Russia, and Saudi Arabia has this year sold crude to Polish and Swedish refiners
"While the headlines focus on Russia and Saudi Arabia jostling for position on the continent, it is Iraq that has stolen a march on its regional rivals," the IEA said.
Europe imports over nine million bpd of crude from outside the region, and sour grades account for more than six million.
Although Russian Urals continues to dominate with around 55 per cent, Iraq has gained substantial market share since 2012 after sanctions were tightened on Iran
, the IEA said.
Before Tehran was banned from selling oil to Europe in 2012, it was delivering about one million bpd of high-sulphur sour crude.
Since mid-2014, Iraq's overall exports have risen by about 40 per cent to above three million bpd and deliveries of one million bpd to Europe during July and August raised Iraq's market share to 17 per cent - allowing it to overtake Saudi Arabia, according to the IEA.
As a result of market share battles, the oil glut in Europe is aggravating further.
"Sour crude markets appear especially over supplied with discounts versus sweet grades widening. Europe is awash with competing sour crudes from the FSU and Middle East and US sour crudes remained depressed by refinery maintenance," the IEA said.