The state owned Iraqi oil marketing firm Somo has announced it will price sales of US-bound crude at differentials to the Argus Sour Crude Index (ASCI) benchmark from April onwards.
The previous Iraqi official formulas had been set at differentials to Platts WTI, but the next batch will use the ASCI benchmark price.
“Iraq’s decision to switch to the ASCI price benchmark demonstrates the increasing attraction of Argus’ transparent and robust method of price discovery in the US crude market,” Argus Media chairman and chief executive, Adrian Binks, said.
The daily ASCI price is calculated from a volume-weighted average of deals done for the three grades of US Gulf of Mexico medium sour crude combined. These are Mars, Poseidon and Southern Green Canyon.
Buyers and sellers have been unhappy with the use of WTI as a pricing reference for term sales because it is heavily influenced by conditions at the landlocked Cushing, Oklahama hub and can become disconnected from the global crude market.
The ASCI benchmark price was launched last year and has already been adopted in Saudi Arabia and Kuwait as the basis for term crude sales to the US.
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