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Iran drops crude price to three-year low in fight for Asia market share

The price reduction is just one of the steps taken by the OPEC producer to ramp up output

Published: Updated:

Iran has reduced the quarterly price for its flagship crude to the lowest in three years in a bid to lure Asian buyers to lock in more term supplies next year.

The price reduction is just one of the steps taken by the OPEC producer to ramp up output and regain market share lost since U.S. and European sanctions aimed at its nuclear program cut its crude oil exports by more than half.

Read our analysis: Could China slowdown threaten the Middle East’s oil market?

Asian buyers have called for lower prices amid a supply glut that has made it tougher for Iran to elbow its way to higher sales volumes despite optimism over the deal that eased some of the sanctions in exchange for curbs on Tehran’s nuclear work.

Iran’s oil sales in September are set to hit a six-month low, according to tanker loading data recently provided to Reuters.

An executive at a North Asian oil refiner said it is in talks with the National Iranian Oil Company for next year’s term supply, but that Iran’s crude prices have been uncompetitive.

In talks

Iran set its official selling price (OSP) for Iranian Light crude for October at a 25 cents a barrel premium to Oman/Dubai, down 35 cents from the month before, two sources with knowledge of the matter said on Thursday.

This puts Iranian Light OSP at a 15-cent premium to Saudi’s Arab Light in the fourth quarter, the lowest quarterly price since the last three months of 2012, according to Reuters data.

Iran sets its OSPs every quarter at differentials to Saudi prices, following discussions with key customers.

In the fight for market share, Iran and fellow members of the Organization of the Petroleum Exporting Countries, including Kuwait and Iraq, have dangled carrots in the form of extended credit and free oil deliveries in addition to outright price cuts to increase their sales.