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Iran, Iraq battle over oil clients with record discounts

16 February 2015 20:17

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Iran and Iraq have taken their battle over a larger share of Asia’s oil market to the open by offering unprecedented discounts to the clients.

Both nations have reportedly cut their prices for March crude oil deliveries to Asia to the lowest in more than a decade.

Iraq’s Basrah Light crude will sell at $4.10 a barrel below Middle East benchmarks, the lowest since at least August 2003, the Washington Post reported.

In response to this, Iran’s National Iranian Oil Company (NIOC) has lowered its official selling price for March Light crude sales to a discount of $2.10 a barrel, the lowest since at least March 2000.

This is nevertheless yet to be approved by officials in Tehran and Baghdad.

The cuts come after Saudi Arabia, the largest crude exporter, reduced pricing to Asia last week to the lowest in at least 14 years.

Iraq is the second-biggest producer in the Organization of Petroleum Exporting Countries (OPEC) and Iran is fourth.

The international prices of oil have plunged by some 50% since June 2014 when it was traded at a fairly stable $100 per barrel. Experts blame a saturated market as well as the weak global demand for sliding oil prices.

Last week, officials from the US Federal Reserve accused Saudi Arabia of engineering the plunging oil price crisis to hurt Iran. However, Iran’s NIOC said it saw no “bad faith” in Saudi oil market moves and that the price reduction decisions of Riyadh were part of a standard campaign to win a larger share of the Asian market. NIOC had also said Iran would do the same and offer discounts on its oil.

OPEC in a recent report said the average price for Iran’s heavy crude oil for January stood at $42.84 per barrels. The figure showed a decrease of $16 compared to the average price for December – the highest drop in price among the crude of all OPEC member states.

Other reports said the price of Iran’s oil in the week ending 9 February rose $7 dollars and were traded at $52.61 per barrel.

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