IRAQ: Japan vessel refuses premium, leaves for Saudi without oilgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
IRAQ: Japan vessel refuses premium, leaves for Saudi without oil
By Tomoko Hosoe Bridge News Singapore--Dec. 1
A vessel chartered by a Japanese refiner is said to be leaving Iraq's Mina al-Bakr port without crude oil as it had refused to pay a U.S. 50 cents per barrel surcharge as of Dec 1 enforced by the Iraqi State Oil Marketing Organization (SOMO). The refiner apparently will head to Saudi Arabia, after having been at anchor at the Iraqi port since Monday, traders said.
Asian customers have chosen to turn down SOMO's insistence on the premium surcharge--"no crude loading until there is an agreement on the 50c premium"-- by leaving the Iraqi port without crude although their crude loading had been scheduled for end-November based on the November crude price formula approved by the United Nations.
To overcome immediate shortfalls and to substitute the scheduled Iraqi crude, Asian customers appear to have managed to contact other crude suppliers, mainly Iran and Saudi Arabia. While the vessel chartered by the Japanese refiner is now on its way to Saudi's Ras Tanura port, South Korean refiners had already moved their chartered vessels by Thursday to Iran and Dubai, sources said.
If feasible, Asian buyers normally prefer Iraqi crude--considered as an "economical substitute"--to other higher-sulfur medium grades typically traded in the spot market, such as Oman, Bahrain's Arab Medium and Qatar Al-Shaheen.
In the spot market, Arab Medium and Oman crude for January were considered at discounts against their official selling prices (OSP) until recently, as usually demand falls when Asia approaches winter and refiners buy more low-sulfur lighter crudes. With the disruption of Iraqi crude now--although the disruption could last for only one or two weeks--Oman and Arab Medium in the spot market are now expected to recover from the current discounts, refinery sources said.
Already a spree of deals on Qatar Al Shaheen are being concluded this week, with some Asian refiners putting in place contingency plans
The serious concerns of demurrage since Monday remains, however, as tanker-owners' daily demurrage could be estimated at around U.S. $70,000, according to the Middle East Economic Survey on Thursday.
-- Martin Thompson (firstname.lastname@example.org), December 01, 2000