Iran drops oil prices to match Saudi levels

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An Iranian offshore oil rig. Photo –

Iran has brought down its oil prices for Asian customers to match Saudi Arabian grades level for next month, the lowest level its light grade have seen in more than five years.

National Iranian Oil Company set Iran Light for October at a premium of 10 cents a barrel 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, a Bloomberg report said.

“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 on Tuesday. “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.”

According to an early September report by Rhodium Group compiled citing customs data, Iranian oil exports dropped 66% in July from a year earlier to less than 1 million barrels a day as the US and the European Union tightened sanctions. 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 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 Monday. 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.

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