For the first time ever since 2017, Iraq's prized Basrah Light crude was sold at a discount to its official selling price. This was brought by the waning demand from China creating a new havoc on the physical oil market in Asia.
BP Plc sold Basrah Light at 80 cents below its' official selling price while China National United Oil Corp. sold their cargoes at a discount of 40 - 50 cents which is set for August loading. Other grades from Russia and the United Arab Emirates were also sold at discount.
Both Iraq and the United Arab Emirates were expecting robust sales coming from Asia for their more sulfurous and dense oil however, Chinese refiners started easing down on their processing. The state-run Sinopec is also planning to lower their operating rates due to the flooding of the Yantze River.
Add to that, while Middle eastern producers are looking for buyers for September loading, the Iraqi crude is being sold for August which may result in a near term drop in demand. It is also one of the varieties held in storage by China's International Energy Exchange that can be resold in the market. This gives buyers alternatives for their supply options.
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