Iran to sell crude oil to Asia on a huge discount in a bid to regain market share in the region
Next month, Iran is going to reduce prices for all its oil grades export to Asia, according to two people who knew the decision. There will be a reduction on the premium on its main light crude over the similar Saudi blend to the narrowest since the end of 2012 as reported by Bloomberg.
National Iranian Oil Co. will sell the Light blend at a premium of 25¢ per barrel more than the original benchmarks, according to the people who refused to be verified until the information is not yet announced to the public.
Saudi Arabia is the world's largest crude oil exporter and biggest member of OPEC, reduced the premium on its main light oil grade to Asia by 30¢ per barrel to 10¢ per barrel more than the original benchmark, as said on September 4. The pricing today from NIOC puts Iran's Light crude at a premium of 15¢ to the Arab Light blend from Saudi Arabia. It would be the lowest premium since it stood at 10¢ in December 2012, according to the compiled data by Bloomberg.
The reduction in the oil price is just one of the steps that OPEC producers have taken to increase output and reacquire lost market share since U.S. and European sanctions targeted at its nuclear program reduce its crude oil exports by more than half.
Iran used to be the second largest producer in OPEC but now fourth, intends to regain market share from other regional sellers like Saudi Arabia. Once the sanctions are removed it will enable Iran to build up oil shipments.
Asian buyers requested for lower prices even if there is oversupply making it tougher for Iran to establish higher sales volumes despite optimism over the deal that alleviate some of the sanctions in exchange for restraint on Tehran's nuclear program, Al-Arabiya News reported.
On October, the official selling price (OSP) for Iranian Light crude will be at 25¢ a barrel premium to Oman/Dubai, down 35¢ from the month before, as confirmed by the two sources who refused identification.