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Oil price competition to intensify when Iranian crude returns

Iran news
Iran news

Oil price competition in Europe is set to intensify when Iranian crude returns to the market after sanctions on its nuclear program are lifted, the International Energy Agency said.

Europe will be the battleground between producers of sour crude grades, including Russia, Iraq, Saudi Arabia and Iran, as the Asian market becomes more “crowded,” the Paris-based IEA said in its monthly report.

Iraq, the second largest oil producer in the Organization of Petroleum Exporting Countries, has increased its market share in Europe after the imposition of sanctions on Tehran resulted in the collapse of Iranian exports, the IEA said. Iraq sold 1 million barrels a day to Europe in July and August, overtaking Saudi Arabia, according to the IEA.

Europe imports over 9 million barrels a day of crude from outside the region, with sour grades accounting for two-thirds of that, according to the IEA.

“By targeting Iran’s former buyers, Iraq — with its fast growing exports — has managed to increase significantly its European customer base,” the agency said.

Iraq’s gains in Europe have also come as Saudi Arabia has pushed its barrels into new territories in the region. Saudi Arabia sold crude to a Swedish refiner for the first time in 20 years earlier this month and has also made headway in Poland. Both countries have traditionally bought their crude from Russia. Saudi Arabia, the biggest oil producer in OPEC, also cut official selling prices for all grades to northwest Europe and the Mediterranean earlier this month.

Despite these gains for Iraq and Saudi Arabia in the continent, Iran is “keen to reclaim” its market share, the IEA said. Sanctions on its nuclear program are widely expected to be lifted next year following a deal agreed with world powers in July.

“Tehran has already lined up buyers in Europe,” the IEA said, citing unidentified Iranian industry people. The nation’s crude would typically compete with that from Saudi Arabia, Iraq and Russia, the IEA said.

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