Iraq’s State Oil Marketing Organization, or SOMO, sold its latest Basrah Heavy crude oil cargo by auction on the Dubai Mercantile Exchange, settling at a $1.63/b premium, a source close to the sale said.
The 2 million barrel cargo is Iraq’s second Basrah Heavy shipment on the exchange. It sold at $1.63/b over Iraq’s September official selling price and will be delivered to an unnamed buyer in Asia on October 23-28.
The DME could not be reached for comment.
SOMO’s first Basrah Heavy cargo was sold on the DME June 21, at a premium of $1.18 over the August OSP.
Iraq has been using the DME for spot Basrah Light and Basrah Heavy cargoes since April.
On Monday, SOMO informed its customers of plans to change its benchmark pricing for crude oil sales to Asia. SOMO currently uses the monthly average of Platts Oman and Dubai assessments through a calendar month to price its crude sales to Asia.
Under the new proposal, SOMO will switch to using the monthly average of the DME’s Oman marker price as its new benchmark.
If confirmed, the changes will begin on all cargoes lifted from January 1, 2018, and would mark a break from other major oil producers in the region, which have relied on Platts benchmarks for years as the basis to set their own OSP differentials.
Iraq exports around 2 million b/d of crude to Asian buyers, out of a total of 3.23 million b/d, from its southern Persian Gulf terminals. The exports are roughly a quarter Basrah Heavy and the rest Basrah Light.