Revenue through oil export in Iraq is likely to increase for the month of April as Basrah Light crude to Asia sells at the highest rate in more than a year against Saudi prices and shipments expand.
Iraq is set to export the most Basrah Light in at least two years next month, at the same time as the grade’s discount to Saudi crude is the narrowest in 17 months.
Alexander Poegl, a JBC Energy GmbH analyst in Vienna, stated that it looks optimistic for them. He added, “They should be on track for a good April. There’s great export capacity available and that will help boost confidence among customers that they’ll get their crude when they want it.”
Oil producers in the Persian Gulf sell the bulk of their crude under long-term contracts to refiners. Most state oil companies in the region set prices as a premium or discount to a benchmark. It has to be noted that Iraq is the second largest exporter as well as producer of OPEC, clinching a place just behind Saudi Arabia.
According to International Energy Agency, Iraq raised total output to a 35-year high of 3.6 million barrels a day in February even with the nation still wracked by bombings that kill by the dozens. While a dispute over revenue between the central government and northern Kurdish region and attacks on a pipeline to Turkey hinder shipments, export capacity in the south is rising with the addition of offshore loading points for ships.
Iraq priced Basrah Light at a premium to Arab Medium from May 2009 through October 2012 before discounting by as much as $1.10 by February 2013. It sought to secure clients amid export delays, Poegl said. Added capacity and production should boost reliability, allowing Iraq to seek price gains, he said. “Iraq can be relatively confident they can maintain the spread at this level or higher,” he said of the 25-cent discount to Saudi oil.