Iran denies reports about discount on crude price

A senior official at the National Iranian Oil Company (NIOC) has rejected recent reports about Iran having considered a discount for foreign customers of its crude oil, noting that the Iranian crude is only sold at the official market price.

According to the Oil Ministry’s official SHANA news agency, Seyyed Mohsen Qamsari, NIOC’s deputy managing director for international affairs, dismissed as false recent foreign media reports claiming that the country is selling its crude oil below the official price in order to undercut Saudi Arabia.

Qamsari noted that reports about “Iran considering discount for customers” of its crude oil are not correct, adding, “Iran's oil is priced in proportion to the official price on the market.”

On February 11, Reuters released a report claiming that Iran has cut its heavy crude price for export to the Mediterranean by a larger extent compared with Saudi Arabia in a bid to attract more buyers after sanctions imposed on the country were lifted.

The report referred to sanctions, which were imposed on the Islamic Republic by the United Nations Security Council as well as unilateral sanctions, which had been imposed on the country by the European Union and the United States since 2010.

Iran reached an agreement with the five permanent members of the Security Council plus Germany last July according to which the sextet agreed to remove sanctions on Iran's economic and energy sectors in return for Iran imposing restrictions on its nuclear activities.

The agreement, known as the Joint Comprehensive Plan of Action (JCPOA), entered into force on January 16, 2016.

In another part of its report, Reuters claimed that the March official selling price (OSP) for Iranian heavy crude to the Mediterranean was set at USD 6.40 a barrel below the Brent Weighted Average (BWAVE), down 35 cents from the previous month.

In Northwest Europe and South Africa, Iranian heavy oil's March OSP was set at USD 6.30 a barrel below BWAVE, up 25 cents from a month ago, against a discount of USD 6.00 for Arab Medium in the same region, the report added.

Rejecting the report, Qamsari said in all new contracts signed by Iran for selling its oil, the price of the country’s crude is set on the basis of the official rate that is in effect at the time of signing the contract and Tehran has no plan to consider any discount for foreign customers.

The rumors came after Iran announced it has started exporting crude oil to European countries following the removal of sanctions.

Last Saturday, an Iranian deputy oil minister and managing director of the National Iranian Oil Company said the country is loading 4 million barrels of oil for shipment to France, Russia and Spain as the first delivery to European buyers since sanctions were lifted.

Rokneddin Javadi added that France’s energy giant, Total, will take delivery of 2 million barrels and the rest will go to refiners in Spain and Russia.

Earlier in the day, Iran’s first vice president said the country’s oil exports will reach 1.5 million barrels per day (mb/d) next month as Tehran moves to benefit from sanctions relief.

“Today, our oil exports have reached 1.3 mb/d, which will reach 1.5 mb/d by” March, Es’haq Jahangiri said, adding that Iran will be exporting 2 mb/d of oil in the next calendar year starting on March 21.

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