The wider discount was likely due to a change in the quality of the Basra Light crude, which has become heavier after new production from fields such as West Qurna was blended into its export stream, traders said.
December Basra Light is 90 cents a barrel below Arab Medium, the widest discount since June 2013, Reuters data showed.
Iraq raised Basra Light's OSP for December by 65 cents to $2.50 a barrel below Oman/Dubai quotes. Saudi Arabia had earlier hiked Arab Medium's OSP by 95 cents to a discount of $1.60 a barrel for the same month.
To address the issue of Basra Light's quality, Iraq's State Oil Marketing Organization (SOMO) has sought feedback from Asian buyers on the possibility of splitting the export stream into two grades.