Iran is selling its Heavy crude grade for March to buyers in Asia at a deeper discount to Saudi Arabia’s prices for the first time in a decade as it seeks to wrangle market share after international sanctions ended.
National Iranian Oil Co will offer supplies to Asia at $2.60 a barrel below the average of Oman and Dubai grades for March, according to a company official who asked not to be identified because of internal policy. Iran, whose pricing has tracked Saudi Arabia’s since at least 2006, is giving buyers an additional 10-cent discount next month, according to data compiled by Bloomberg.
The fifth-largest producer in the Organisation of Petroleum Exporting Countries is seeking to win back market share after economic sanctions were lifted last month. The nation has said it will boost exports by 500,000 bpd immediately and is preparing to introduce a new heavy grade as early as March. Iran, which was Opec’s second-biggest producer before more penalties were imposed in 2012, is diverging from its quarterly pricing structure amid weaker demand, according to the NIOC official.
“This is seen as a part of Iran’s method to win back its lost market share,” Will Yun, a commodities analyst at Hyundai Futures Corp in Seoul, said by phone. “The country will need to have a good portion of its share restored before it can start negotiating with the Saudis and Opec.”
State-owned Saudi Arabian Oil Co last week offered a $2.40 a barrel discount on Arab Medium crude for March sales to Asia. Based on the quarterly pricing structure which the Tehran-based company has used previously, Iranian Heavy was expected to sell at $2.50 below the benchmark Oman-Dubai average, 10 cents less than Saudi Arabia’s price for its comparable grade.
National Iranian Oil also gave an additional 10-cent discount on its Forozan Blend to Asia, setting prices at $2.43 below the Oman-Dubai average for March, said the official. The company kept to the quarterly formula for sales of Iranian Light, offering it at 80 cents less than the benchmark.
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