Latest News

Sources say that Iraq's SOMO is offering big discounts on Basrah oil for the term of July.

According to trade sources, and a document that was reviewed by us, 'Iraq SOMO offered large discounts on its official selling price to encourage term buyers to lift Basrah oil?from the terminal inside the Middle East Gulf this July.

Discounts for Basrah Medium Crude ranged between $14 and $16 per barrel. Basrah Heavy Crude discounts varied from $16.80 to $18.80 per barrel depending on the loading period. Discounts for cargoes that load between July 1-5 are greater, while they narrower for those loading between July 6-10 or July 11-31.

SOMO has asked buyers to "submit" their quantity nominations within one day of receiving the letter.

A trade source stated that the discounts were intended to compensate buyers who had to pay high chartering fees for ships to enter the Strait of Hormuz in order to get oil.

The daily rate of a Very Large Crude Carrier for loading 2 million barrels from the Middle East into China has increased to around $300,000 from $220,000 before the U.S. Israel and the United States launched attacks on Iran. However, LSEG data show that this rate has fallen from a high of $600,000.

Two other people stated that the 'wide discounts on Basrah crude oil may entice purchasers, but it remains to be seen if the 'Strait of Hormuz can be passed.

Another source stated that SOMO had issued a tender last week to sell crude oil for July loading. However, the tender failed to generate any interest from buyers because traders were having difficulty booking tankers into the Gulf.

Oil loading by other Middle East producers is accelerating, but shipping in the Strait of Hormuz has slowed down amidst recent ship attacks and strikes between the U.S.A. and Iran. Reporting by Florence Tan from Singapore and Nidhi in New Delhi, with editing by Tom Hogue & Sonali Paul

(source: Reuters)