Vitol has bought at least 25 million barrels of Iraqi crude for September loading, making it Iraq’s second-largest buyer after ADNOC. Reuters reported that Baghdad is offering steep discounts to keep exports flowing through the Strait of Hormuz.
According to a tender document reviewed by Reuters, Iraq’s SOMO offered September crude at discounts of $15 to $20.80 per barrel to its official selling prices. Trading sources said some cargoes changed hands at even deeper discounts.
The pricing reflects a key problem for Iraq: access to ships. The country does not have a large tanker fleet of its own, while most of its crude is shipped from southern terminals deep inside the Persian Gulf. Tanker traffic through Hormuz remains well below prewar levels, and freight rates have surged as shipowners demand more to send vessels into the area.
Reuters sources said Vitol purchased between 25 million and 30 million barrels of September-loading crude. ADNOC agreed to buy another 40 million barrels for September after receiving an allocation of 32 million barrels in August, of which it ultimately lifted about 20 million.
Those buyers have the logistics Iraq lacks. ADNOC has been moving crude from inside Hormuz for resale through terminals at Fujairah and Sohar, while Vitol operates one of the world’s largest oil trading and shipping networks.
Iraqi exports from southern ports averaged 2.35 million barrels per day in August and have risen to about 2.6 million bpd so far in September. Iran also began allowing some tankers carrying Iraqi crude through Hormuz in August after requests from Baghdad.
Iraq is also trying to open another export route. Earlier this month, it started trucking southern crude north toward Kirkuk for export through Turkey’s Ceyhan port. The trial moved only about 38,000 barrels over two days using 209 tanker trucks, while flows on the northern route were running near 200,000 bpd.
