Both Iran and Iraq, seeking to increase their share of the Asian oil market, are offering unprecedented discounts in that region. Both nations have cut their crude oil prices to Asia for next month to lower than they have been in 12-15 years.
Iraq’s Basrah Light crude will sell at the lowest price since at least August 2003, the Washington Post reported. Iran has responded by offering a discount of $2.10 per barrel, bringing its price to lower than it's been in 15 years.
Saudi Arabia, the world's largest exporter of crude oil, reduced its own pricing to Asia last week to the lowest in at least 14 years.
U.S. oil production, both crude and shale, has eaten into OPEC profits in recent years. Shale oil is an unconventional, synthetic oil produced from oil shale rock fragments. Oil production in the U.S. has jumped from 5 million barrels per day in 2008 to about 8.5 million last year, and is expected to top out at 9.3 million this year, according to the U.S. Department of Energy.
The official OPEC price per barrel stood at $56.69 on Tuesday. This compares with the all-time high of $107.89 this past June, and a long-time low of $41.50 two years ago.
Prices in Israel have accordingly dropped to their lowest in five years, with one liter of 95 octane gas selling for 6.08 NIS. As prices inch back up, gas is expected to increase by about 20 agorot per liter this coming month.
Iran’s Minister of Petroleum Bijan Namdar Zangeneh describes the current status of his country's oil industry as “catastrophic." In his estimation, there will not even be funds to pay salaries of Petroleum Ministry staff.