Iraq to adopt new oil benchmark from April
Baghdad, February 12, 2010
Iraq will switch the benchmark for pricing sales of around half a million barrels per day (bpd) of crude to the United States, a senior Iraqi oil official said.
The move mirrors a change by top oil exporter Saudi Arabia and Gulf neighbour Kuwait to pricing against the Argus Sour Crude Index (ASCI), away from US light sweet crude futures.
'The pricing policy will take effect for sales to the US from April,' Falah Alamri, head of Iraq's State Oil Marketing Organisation (SOMO) told Reuters on Thursday.
'Switching to Argus was the best solution for us to ensure stable prices and also to satisfy our costumers.'
The switch would avoid 'variations and instability' in prices on the U.S. benchmark, he said.
Iraq would use the ASCI for both its Basra Light crude, exporter from the offshore Basra terminal in the Gulf, and the heavier, more sour Iraqi Kirkuk crude exported from the Turkish Mediterranean oil terminal of Ceyhan, Alamri added.
The US benchmark is for delivery of a different quality of crude to most of the oil exported from Middle East producers and is also for an inland delivery point.
Price trends for the US crude had diverged from the import market of the US Gulf. ASCI is a trade-weighted index of three high sulphur, or sour, crudes produced in US offshore waters.
US refiners had lobbied Iraq to switch to the ASCI, and Baghdad dispatched officials to the US and Europe to talk to customers about making the switch.
Iraq exported around 460,000 barrels per day (bpd) of crude to the United States in the first 11 months of last year, according to U.S. government data, down from 627,000 bpd in 2008.-Reuters