By Florence Tan
SINGAPORE (Reuters) - Iraqi Basra crude cargoes in November have sold at the widest discounts to official prices in more than a year, with cargoes backed up after hurricanes hit the U.S. Gulf coast facing competition from Mexican crude, trade sources said on Friday.
The drop in U.S. demand for Iraqi oil may impede the Organization of the Petroleum Exporting Countries' second-largest producer's effort to increase exports from the southern port of Basra to make up for a shortfall from the north.
Basra crude shipments have been backed up after four hurricanes disrupted arrivals into the U.S. Gulf between August and October.
More than 22 million barrels of Basra crude were due to land in the United States in both October and November, trade flow data on Thomson Reuters Eikon showed, the highest monthly volumes since data tracking started in 2015.
But some of the cargoes remain unsold as crude from Mexico has filled some U.S. demand, a Singapore-based trader said.
U.S. imports of Mexican crude hit a four-month high of 21.3 million barrels in October, data showed, after earthquakes and storm damage shut Mexico's biggest refinery for most of the month.
"The hurricanes caused an overhang of Basra crude while more Mexican oil was sold into the U.S. because of the refinery turnaround," the trader said.
November-loading Basra Light discounts widened to 30 cents to 70 cents a barrel to OSPs. In the previous month the price ranged from a premium of 30 cents to a discount of 10 cents, depending on the cargo's destination.
Premiums for November-loading Basra Heavy slipped to 10 cents to 50 cents to official prices, they said, from premiums of 80 cents to $1 the previous month.
They declined to be named as they are not authorized to talk to the media.
To cope with Basra crude surplus in the United States, traders have slowed ships and stored some cargoes off the Gulf coast, shipping data on Eikon showed.
For example, supertanker New Achievement, carrying 2 million barrels of Basra crude, has been parked in the U.S. Gulf since Oct 8.
The big discounts for Basra are attracting demand from Asian refiners, the sources said.
December-loading Basra crude for Asia has been sold at a discount of about 50 cents as Iraq is likely to raise monthly official prices in line with Saudi Arabia while also increasing exports.
In a further blow to Iraq, it failed to attract any bids for prompt-loading Basra crude to Europe in an auction on Tuesday.