Iran Oil Prices Down, Reflecting Sanctions

Brian Hicks

Written By Brian Hicks

Posted September 12, 2012

It’s emerged that for next month, National Iranian Oil Co. has lowered the price of its oil to Asian customers relative to Saudi Arabian grades. That means the spread is now at its lowest level in over half a decade.

Iran’s state-owned oil company set Iran Light at a premium of 10 cents a barrel relative to Saudi Arabia’s Arab Light for October. That’s down from 19 cents the month before.

Iran Heavy is 15 cents below Saudi Arabia’s Arab Medium, changed from the earlier 9 cent discount. Forozan, lowered from 12 cents, will be set at a 10 cent premium relative to the medium grade.

Bloomberg reports:

“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 today. “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.”

Due to tightening U.S. and European sanctions, Iran’s oil exports dropped steeply by 66 percent in July, relative to 2011, to less than a million barrels per day.

Rhodium Group analyzed customs data, and has stated that current export levels are probably at 940,000 barrels a day, down from 1.7 million bpd in June and 2.8 million bpd in July of last year.

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