Iraq delivers 2 million barrels of crude outside Strait of Hormuz, a first in decades
In short
Iraq Oil Tankers Company confirmed on October 3 that it used a large tanker to carry 2 million barrels of crude out of the Strait of Hormuz and deliver it to buyers waiting outside, a method the state firm's president said it had not used for decades. Company president Ali Qais Abdul Jabbar said ship-to-ship transfers give the State Oil Marketing Organization more flexibility in selling and pricing, and Iraq has offered a discount of more than $20 a barrel to attract buyers. Jiemian News reported that sales have still not taken off, with SOMO director general Ali Nizar saying Kuwait and Qatar are offering discounts of up to $35 a barrel.
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Iraq Oil Tankers Company confirmed on October 3 that it had used a large tanker to carry 2 million barrels of crude out of the Strait of Hormuz and deliver it to buyers waiting outside the strait. A company executive said this was the first time in decades that the state firm had delivered oil this way. Iraq had previously delivered crude mainly at the southern oil port of Basra. [ 1 , 2 , 3 ]
Company president Ali Qais Abdul Jabbar said in a statement that ship-to-ship transfers give the State Oil Marketing Organization more initiative and flexibility in selling and pricing. Shipping through the strait has been disrupted since the Iran war broke out, and Iraq said it was willing to offer a discount of more than $20 a barrel to encourage buyers to come and collect their cargo. [ 1 , 2 , 3 ]
Sales have nonetheless not opened up, according to Jiemian News. SOMO director general Ali Nizar said competition is very intense, with Kuwait and Qatar offering discounts of up to $35 a barrel, and that shipping risk remains too high. Saudi Arabia, the United Arab Emirates and other Gulf producers had moved earlier to ship crude out of the strait by ship-to-ship transfer, with Iraq arriving “late,” the reports said. [ 3 ]
Iraq's oil minister, Basim Mohammed Khudair al-Abadi, told parliament in September that Saudi Arabia was buying up tanker capacity and driving up Iraq's shipping costs, Jiemian News reported. Saudi Arabia denied this. [ 3 ]
Iraq is among the Gulf producers most affected by the disruption, Jiemian News reported: before the war, 95% of its exported oil left through the Strait of Hormuz and 90% of government finances depended on oil revenue. With the route blocked, Iraq has had to cut oil production and is seeking to reduce its reliance on Gulf routes by diversifying exports, including through Turkey and Syria. [ 3 ]
Why it matters
Iraq is among the Gulf producers most exposed to the disruption of Hormuz shipping: Jiemian News reported that 95% of its oil exports and 90% of government revenue depended on the route before the war. The shift to delivering outside the strait, following Saudi Arabia and the UAE, signals how Gulf crude logistics are being reworked while the waterway is blocked. For oil buyers, the reported discount battle with Kuwait and Qatar points to extra supply competing for the same customers.
Key facts
- Iraq Oil Tankers Company confirmed on October 3 that it shipped 2 million barrels of crude out of the Strait of Hormuz on a large tanker and delivered it to buyers waiting outside [ 1 , 2 , 3 ]
- A company executive said it was the first delivery of its kind by the state firm in decades [ 1 , 2 , 3 ]
- Company president Ali Qais Abdul Jabbar said ship-to-ship transfers give the State Oil Marketing Organization more initiative and flexibility in selling and pricing [ 1 , 2 , 3 ]
- Iraq previously delivered crude mainly at the southern oil port of Basra [ 1 , 2 , 3 ]
- Iraq said it was willing to offer a discount of more than $20 a barrel to encourage buyers to collect cargo [ 1 , 2 , 3 ]
- State Oil Marketing Organization director general Ali Nizar said competition is very intense, with Kuwait and Qatar offering discounts of up to $35 a barrel [ 3 ]
- Before the war, 95% of Iraq's oil exports left through the Strait of Hormuz and 90% of government finances depended on oil revenue, Jiemian News reported [ 3 ]
Confirmed by several sources
- Iraq Oil Tankers Company confirmed on October 3 that it used a large tanker to move 2 million barrels of crude out of the Strait of Hormuz and deliver it to buyers waiting outside the strait [ 1 , 2 , 3 ]
- The company said this was the first time in decades that the state firm had delivered oil this way [ 1 , 2 , 3 ]
- Company president Ali Qais Abdul Jabbar said in a statement that ship-to-ship transfers give the State Oil Marketing Organization more initiative and flexibility in selling and pricing [ 1 , 2 , 3 ]
- Iraq previously delivered oil mainly at the southern oil port of Basra [ 1 , 2 , 3 ]
- Iraq said it was willing to offer a discount of more than $20 a barrel to encourage buyers to collect the oil [ 1 , 2 , 3 ]
- Shipping through the Strait of Hormuz has been disrupted since the Iran war broke out [ 1 , 2 , 3 ]
Still unclear
- Whether the 2-million-barrel shipment found buyers and how far Iraq's oil sales have recovered Only Jiemian News reports that sales have not picked up because of rival discounts and high shipping risk; the other documents do not address the outcome.
- Iraqi suggestions that Saudi Arabia bought up tanker capacity and pushed up Iraq's shipping costs Single source: Iraq's oil minister, speaking in parliament in September, as reported by Jiemian News; Saudi Arabia denies it, and no other document mentions the dispute.
- The location of the ship-to-ship transfer, the identity of the buyers and the price paid Not stated in any of the documents.
What local media are saying
Timeline, local time
- Iraq Oil Tankers Company confirms it used a large tanker to move 2 million barrels of crude out of the Strait of Hormuz for delivery to buyers waiting outside. [ 1 , 2 , 3 ]
- Iraq's oil minister, Basim Mohammed Khudair al-Abadi, tells parliament that Saudi Arabia is buying up tanker capacity and raising Iraq's shipping costs; Saudi Arabia denies it, according to Jiemian News. [ 3 ]
- CLS reports the delivery, citing the company's statement and the discount offer. [ 1 ]
- Jiemian News adds SOMO director general Ali Nizar's comments on intense competition and rival discounts, and Iraq's export dependence on the strait. [ 3 ]