Iran Lowers OSPs Relative to Saudi Arabia: Asia Crude

Iran lowered the price of its oil to customers in Asia compared with Saudi Arabian grades for next month, bringing down the relative cost of its light grade to the lowest level in more than five years.

National Iranian Oil Co. set Iran Light for October at a premium of 10 cents a barrel to Saudi Arabia’s Arab Light, down from 19 cents in September and the smallest spread since June 2007. Iran Heavy will be priced at a 15 cent discount to Saudi’s Arab Medium, down from a 9 cent discount. Forozan will be a 10 cent premium to the medium grade, falling from 12 cents.

“Iran’s latest batch of official selling prices are quite revealing in that NIOC has decreased prices for October-loading barrels relative to competing Saudi Arabian crude,” Geneva-based JBC Energy GmbH said in a report today. “The lower prices could be seen as an indication that the Iranians are experiencing difficulties in selling their crude, something that would seem logical given the lack of Japanese and South Korean buying seen in July, the first month of the EU ban on insuring Iranian vessels,”

Iranian oil exports dropped 66 percent in July from a year earlier to less than 1 million barrels a day as the U.S. and the European Union tightened sanctions, according to a Sept. 5 report by Rhodium Group, citing customs data. Rhodium estimates exports at about 940,000 barrels a day, compared with 1.7 million barrels a day in June and 2.8 million in July 2011, the New York-based economic research group said Sept. 5 in an e-mailed report.

Kuwait Petroleum Corp. set the October price for its export oil grade to Asia at 35 cents a barrel below the average of Oman and Dubai oils, the state-run company said in a faxed statement yesterday. That’s up from a 50 cent discount this month.

KPC has kept its export grade priced at a 20-cent discount to Saudi Arabia’s Arab Medium for four months.

Dubai Timespreads

Dubai crude’s backwardation, when near-term deliveries are more expensive than later supplies, rose by 11 cents, the second day of increases. Spot prices were $1.30 a barrel more than levels for cargoes two months later, the biggest difference since July 11, according to data from PVM Oil Associates Ltd.

The price difference, known as a timespread, is 53 percent wider so far in September. An increasing backwardation signals strengthening demand from refineries for prompt crude amid tightening supplies.

PV Oil Corp., Vietnam’s state-run oil-marketing company, is seeking to buy as many as two 600,000 barrel cargoes of low-sulfur crude for delivery at its Dung Quat refinery from mid-October to mid-November, according to two people who participate in the market, asking not to be identified because they aren’t authorized to speak to the media. Bids are due today.

MRPL Results

OAO Rosneft is offering two 95,000 metric-ton cargoes of Russian Sokol crude for loading in November, according to two traders who participate in the market. The offer closes tomorrow.

BP Plc and Trafigura Beheer BV sold crude cargoes for loading in October and November to India’s Mangalore Refinery & Petrochemicals Ltd., said three traders who asked not to be identified because the information is confidential.

BP sold 600,000 barrels of Dubai crude to the unit of India’s biggest state-run explorer for loading in the second half of October, they said. Mangalore Refinery paid a premium of about $1.25 a barrel to benchmark Dubai crude prices on a free-on-board basis, the traders said.

Trafigura sold the refiner a similar amount of Oman crude for loading in the first half of November for about $2.50 a barrel more than benchmark Dubai crude prices on a cost and freight basis.

Profits from processing a barrel of benchmark Dubai crude into fuels such as diesel and gasoline priced in the regional trading hub of Singapore averaged $4.47 during the last five days, according to data compiled by Bloomberg. The 30-day average is $5.62.


The October Brent-Dubai exchange for swaps, which measures the European oil’s premium to the Mideast marker, rose 10 cents to $3.15 a barrel, according to data from London-based PVM. The November EFS gained 5 cents to $3.16.

Oman oil for November rose 11 cents to settle at $113.07 a barrel at 12:30 p.m. on the Dubai Mercantile Exchange.

Gunvor Group Ltd. bought the only Dubai partial cargo sold today, according to a survey of people who monitor the Platts pricing window. The Cyprus-based trading company paid SK Innovation Corp. $113.10 a barrel for the 25,000-barrel lot.

(Corrects Gunvor domicile in last paragraph of story published Sept. 11.)
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