Iraq offers $2.80 per barrel discount for November oil sales

An oil tanker at the an Iraqi port. Photo: Scanpix Baghdad (IraqiNews.com) – Iraq’s State Oil Marketing Organization (SOMO) has established the November official selling price for Basrah Medium crude oil to Asia, which is $2.80 per barrel, lower than the Oman/Dubai average. This price fluctuation reflects a dynamic shifting strategy in Middle Eastern petroleum flows, fueled mostly by regional conflict concerns, rising transportation expenses, and fierce competition for market dominance. The selling price for Basrah Medium crude to Asian consumers is set at a discount of $2.80 per barrel less than the benchmark for Oman and Dubai. The development comes after a big historical reduction in October, when SOMO aggressively increased discounts for October shipments to between $34.50 and $37.00 per barrel below regional benchmarks to secure clients despite logistical constraints. Iraq’s action follows a larger pattern of activity among Gulf producers. Earlier this week, Saudi Arabia suddenly reduced its November selling price for Arab Light crude to Asia by a $3 to $5 discount per barrel below the Oman/Dubai benchmark. Iraq and other Gulf states are offering significant discounts to handle extraordinary geopolitical and physical obstacles. Escalating regional instability, particularly interruptions in the Strait of Hormuz, has raised shipping costs and insurance prices. Producers are heavily lowering the Free on Board (FOB) price to cover significant transportation expenses, ensuring that the final delivered price stays competitive for customers in Asia. With increased US sanctions on Iranian imports, independent Chinese refiners have switched to sulfur-rich Iraqi oil as an alternative. Major foreign trading companies, notably Vitol Group, Trafigura, and Mercuria, have taken steps to distribute Iraqi oil as SOMO implements structural flexibility to protect national oil earnings, which account for more than 85 percent of Iraq’s federal budget.