No discount for Iran oil, says Tehran’s former OPEC envoy
Tehran, Iran, Dec. 19
Iran’s former representative at OPEC, Mohammad Ali Khatibi says Iran has never offered any discount to its crude oil customers during the sanctions period, and some might have mistaken the oil price differential with a discount.
“In the previous sanctions term, Iran did not offer any discount,” Khatibi told Trend.
“Oil price differential is not a discount. For example, price differential for Iran’s crude with Brent is $2. This $2 is not considered a discount, but it shows the lower quality of Iran’s oil as compared to Brent,” he said.
“Depending on the oil quality, the prices differ and no country can claim that its oil is exactly like the Brent oil,” he said.
Heaviness and sweetness are two main factors that affect prices of crude oil.
“The quality of oil impacts the price, so there should be different prices for various crudes,” he said.
“I do not remember Iran offer a discount to anybody. Oil market is a transparent market; if Iran offers a discount to a customer it should offer discounts to all customers,” Khatibi added.
“In the previous period, the decision was to not offer any discount to anyone, because we knew that our situation was not going to get better. If a producer offers a high discount, other buyers will also want it, therefore a discount should either be offered to all or none,” he said.
Recently, Reuters has reported Iran is going to offer its crude to Asian buyers, to be delivered in January, at $1 per barrel less than this month, citing a pricing document. It claimed this makes Iranian Light $0.30 a barrel cheaper than Saudi Arab Light, with Iranian Heavy costing $1.25 less per barrel than the Kingdom’s Arab Medium grade.
“I do not confirm the Reuters report; if it means the monthly price, which every exporter chooses on a monthly basis, so it is not a discount,” Khatibi said.
“Due to changes in some factors, the differential changes every month. This is the crude quality difference as compared to Brent oil,” he added.