On Monday, a notice from Iraq’s Oil Marketing Company (SOMO) showed that an adjustment has been made to the price mechanism in compensating buyers for fluctuations in the density of its crude exports, starting with exports in 2021.
This announcement followed SOMO’s plan to establish the third crude export grade namely Basra Medium in January.
The new Basra Light export-grade will have an American Petroleum Institute (API) gravity of 33 degrees, Basra Medium’s gravity will be 29 degrees, and Basra Heavy crude will have 24 degrees.
SOMO will compensate Basra Light and Basra Medium lifters by 40 cents/barrel for each full degree below the grades’ API gravity while Basra Heavy lifters will accept 60 cents/barrel.
On a related note, in October, Iraq shipped roughly 2.77 million bpd of Basra crude.
