Iran Cuts European Crude Prices for February Delivery

Both Iran and Saudi Arabia have increased light crude prices for February delivery to Asia by $0.60 per barrel.

Following the lifting of sanctions against Iran allowing the nation to return to the international oil export market, the Islamic Republic has cut its crude prices to Europe for February delivery.

The National Iranian Oil Company (NIOC)'s official price list shows a reduction of $0.55 per barrel in light crude for North West Europe, and a $0.15 per barrel reduction for the Mediterranean, the WSJ reports.

Saudi Arabia is said to have made a similar move, cutting its Northwest Europe and Mediterranean light crude prices for February delivery by $0.60 and $0.20 per barrel respectively.

Both Iran and Saudi Arabia have increased light crude prices for February delivery to Asia by $0.60 per barrel, however.

While the news will likely keep pressure on oil and bunker prices, it suggests that Iran is - at least officially - following a previously stated preference of keeping prices inline with its peers, and swapping crude for goods or refinery investments rather than slashing prices to help move its product into the saturated market.

Even so, Iran has repeatedly said it will raise its crude output by 500,000 barrels per day (bpd) once sanctions were lifted, while the International Energy Agency (IEA) Tuesday says it believes around 300,000 bpd of additional crude will be hitting the already massively oversupplied world markets by the end of the current quarter.

The current pressure on oil markets has already pushed down the average price for IFO380 bunkers in Rotterdam to 109.00 per metric tonne (pmt) as of Tuesday, a decline of $33.50 pmt month-on-month.

Last week Ship & Bunker noted that with the current relationship between Brent and Rotterdam bunker prices, where IFO380 is currently priced at around 50 percent of crude, bunker buyers could realistically expect to see double digit bunker prices in Europe's biggest port once Brent breaks the $26.50 per barrel mark.