Iraq has sharply cut prices for its crude grades to Europe as its marketing strategy diverges markedly from other Mideast producers. Market dislocations as Europe seeks to wean itself off of Russian crude are reshaping global trade flows, and Iraq appears to be seeking to expand its European footprint through discounted barrels. But the scale of the discounts may also be reflective of logistical constraints that Iraq has to overcome.
State marketer Somo released Iraq’s official selling prices (OSP) for July this week, and while prices to Asia rose and those to the US stayed flat, prices to Europe were cut further. Basrah Medium, which was launched in January 2021, was priced at a record $7.60/B discount to Dated Brent, while the $11/B discount for Basrah Heavy (launched May 2015) is close to its record $11.85/B discount to Brent. Only Kirkuk, which is sold almost entirely to Turkey via pipeline, has escaped the steep cuts (see chart 1). (CONTINUED - 857 WORDS)