Somo restricts pricing basis of Basrah crude tender

Iraqi state-owned oil marketer Somo has restricted the pricing basis in its latest Basrah tender, a practice it normally adopts in periods of high sour crude demand either globally or in its key market of Asia-Pacific.

The firm is offering 1mn bl of resellable Basrah Medium crude, loading on 29-31 May. Somo is selling the cargo on behalf of state-owned Basrah Oil (BOC), based on the latter's entitlement in the 13bn bl Majnoon oil field. The Basrah Medium is being offered without destination restrictions, but Somo has requested that bids must be at premiums to its official May formula price for Asia-Pacific customers — traditionally, the company's costliest price. Somo's formula price for May-loading Basrah Medium cargoes to Asia-Pacific was set at a 60¢/bl premium to the monthly average of Oman-Dubai assessments. Tender submissions will be accepted until 12:00 Baghdad time on 17 April.

This is Somo's third Basrah Medium sell tender since the new grade debuted in January. The company has also placed one Basrah Heavy shipment via spot tender this year. Of the four tenders, Somo's latest for Basrah Medium is the only one that places restrictions on the pricing basis. The other three all accepted bids at premiums to the official formula price of the destination region — which Somo divides into Europe, the Americas and Asia-Pacific. Typically, the company only specifically requests bids against the official Asia price when sour crude demand is high, either globally or in Asia-Pacific. Interest from European and Mediterranean buyers tends to be lower on these occasions.

Asia-Pacific is the core market for Somo's Basrah crude exports, making up 78pc of its total Basrah loadings, or 2.27mn b/d, in January-March, according to Argus tracking.

By Ruxandra Iordache