Iraq loosens export rules to get better prices
(Article from Faron Davis)



Iraq has relaxed its crude oil exporting rules in a bid to pocket better prices for its most precious commodity despite the continuing rally, according to Oilprice.

Baghdad now allows buyers to withhold the destination of the cargo when they buy it until two weeks after the issuance of the cargo’s bill of lading.

Not having to set a destination for the cargo at the time of buying provides oil traders with greater flexibility in reselling it, depending on a price comparison and possible shortages that would produce better prices for the cargo.

Iraq has already sold two cargoes under the laxer rule, for a total of 4 million barrels.

The cargoes sold at a premium to the official selling price at an auction in Dubai. An earlier lot that sold on the spot market, under the old and more stringent rules, fetched a lower price than the official selling figure.

Energy Aspects analyst Nevyn Nah said that “Sellers are seeking higher prices by removing contractual restrictions at a time of heightened competition. Buyers are happy to pay a premium for cargo optionalities, which in this case lets them lock in its destination later, allowing them to swing shipments east or west and take advantage of arbitrage opportunities.”

OPEC’s number-two is highly dependent on its oil revenues.

Iraq’s total oil export capacity is close to 5 million bpd, Energy Minister Jabbar al-Luiebi told a Chatham House conference in London Monday, but noted that “Iraq has made it clear at every time and every event that Iraq will comply with OPEC declarations in good spirit, genuine spirit.”

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