Iran has revealed its oil prices to European buyers for the first time since sanctions were lifted against the Middle Eastern country.
The most competitive pricing compared with Saudi Arabian supply in 21 months underscores its intention to win back market share.
Iran Heavy, one of the country’s main export grades, will cost $1.25 a barrel less than Saudi Arabia’s most similar crude in March, notices from both nations’ state oil companies show.
The Persian Gulf country supplied Turkey during the sanctions and continued to publish prices for Europe throughout the measures. Its most recent discount will be the deepest against the Saudi grade since June 2014.
In Asia, having tracked Saudi prices since at least 2006, Iran is also giving deeper discounts for the grade. The fifth- largest producer in the Organisation of Petroleum Exporting Countries (Opec) has said it will boost production and exports by one million barrels a day this year and plans to introduce a new heavy grade.
Glut
The nation, which was Opec’s second-biggest producer before penalties were stepped up in 2012, says others should make way for its return to the global market amid a glut and plunging prices.
“Iran is going to have to price aggressively until they can get themselves established once again in the market,” Robin Mills, chief executive officer of Qamar Energy, said . “They’re trying to add a lot of supply to the market in a short time.”
Lost daily sales
Marketers at the state-run
National Iranian Oil
Company can chase more than 500,000 barrels of lost daily sales in Europe alone, now that sanctions limiting sales to just six mostly Asian buyers have ended.
Under those measures, just China, India, Japan, South Korea, Taiwan and Turkey were allowed to buy limited quantities of Iranian oil.
Iran’s oil exports fell to an average of 1.4 million barrels a day in 2014 from 2.6 million barrels daily in 2011, the year before the US and EU intensified sanctions, the US Energy Information Administration said in June.
“Everyone is interested in Iranian barrels, as long as the price is reasonable,” Ehsan Ul-Haq, senior oil market consultant at KBC Energy Economics said, adding that its discounts were deeper than were necessary to be competitive.
“When you start exporting to a certain region, you have to provide some certain introductory discount,” he said, referring to the European pricing decision. – (Bloomberg)
