SINGAPORE (Reuters) - Turkish Petroleum Corporation (TPAO) has sold a cargo of Iraqi Basra Heavy crude loading in September at a deep discount, hit by a plunge in fuel oil margins and ample supply, several traders said.
The 1 million barrels of Basra Heavy crude loading on Sept. 6 was sold last week to BB Energy at a discount of at least $2 to its official selling price (OSP), they said.
That compared with a premium of more than $1.60 a barrel to OSP when Iraq's Oil Marketing Company (SOMO) sold 2 million barrels of September-loading Basra Heavy to Petro Diamond via a tender that closed on Aug. 9.
Traders said the loading date for TPAO's cargo was too prompt while demand for the crude, which has a high sulfur content and produces mostly fuel oil when processed by a refinery, was tepid due to recent poor fuel oil cracks.
Fuel oil margins plunged 300% from end-July to mid-August, dragging down overall refining margins in Asia.
Also, Iraq's SOMO allocated more Basra Heavy crude to upstream partners in September, traders said.
The volume of Basra Heavy crude without a fixed destination was at 7-8 million barrels for September, 3-4 million barrels more than the previous month, one of the traders said.
TPAO and SOMO could not be immediately reached for comment. BB Energy declined to comment.