Iraq to adopt new oil benchmark from April

February 13, 2010 · Posted in NEWS
Iraq will switch the benchmark for pricing sales of crude to the United States to the Argus Sour Crude Index away from NYMEX U.S. light sweet crude futures, a senior Iraqi oil official said on Thursday.

The move follows a similar switch by top oil exporter Saudi Arabia and its fellow OPEC member Kuwait to the Argus index (ASCI).

“The pricing policy will take effect for sales to the U.S. from April,” Falah Alamri, head of Iraq’s State Oil Marketing Organisation (SOMO) told Reuters. “Switching to Argus was the best solution for us to ensure stable prices and also to satisfy our costumers.”

The switch would avoid “variations and instability” in prices on the U.S. benchmark, he said.

The U.S. benchmark is for delivery of a different quality of crude to most of the oil exported from Middle East producers and is also for an inland delivery point.

Price trends for the U.S. crude had diverged from the import market of the U.S. Gulf. ASCI is a trade-weighted index of three high sulphur, or sour, crudes produced in U.S. offshore waters.

U.S. refiners had lobbied Iraq to switch to the ASCI, and Baghdad dispatched officials to the U.S. and Europe to talk to customers about making the switch.

Iraq exported around 460,000 barrels per day (bpd) of crude to the United States in the first 11 months of last year, according to U.S. government data, down from 627,000 bpd in 2008.

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