AI Brief
- Iraqi Oil Tanker Company has delivered 2 million barrels of crude oil via ship-to-ship transfer outside the Strait of Hormuz for the first time in decades.
- Iraq offered discounts exceeding US$20 per barrel to encourage buyers amid shipping disruptions and competition from Kuwait and Qatar, who offered even steeper discounts.
- With oil exports forming 90% of state revenue, Iraq is seeking alternative export routes to reduce reliance on the vulnerable Strait of Hormuz.
THE Iraqi Oil Tanker Company confirmed on Saturday that it has transferred 2 million barrels of crude oil through the Strait of Hormuz by a large oil tanker to deliver to buyers waiting outside the strategic waterway, marking what company executives describe as the state-run company's first such delivery method in decades.
In a statement, the president of the company said the ship-to-ship transfer method provides the national oil marketing organization with greater leverage and flexibility in sales and pricing. Previously, Iraq primarily delivered oil to buyers at its southern port of Basra. Following the outbreak of the conflict involving Iran, shipping through the Strait of Hormuz faced disruptions. To encourage buyers to pick up cargo outside the choke point, Iraq offered discounts of over 20 U.S. dollars per barrel.
However, sluggish sales have persisted amid fierce regional competition and high shipping risks. The head of Iraq's oil marketing organization noted that neighboring producers have undercut Iraq, with Kuwait and Qatar offering steeper discounts of up to 35 U.S. dollars a barrel.
Additionally, Saudi Arabia and the United Arab Emirates had already adopted ship-to-ship transfers to bypass the strait. In a September address to parliament, Iraqi Oil Minister Bassim Mohammed Khudair hinted that Saudi Arabia had bought up oil tankers to monopolize shipping capacity and drive up Iraq's transport costs, an allegation Saudi Arabia has denied.
Iraq remains one of the most vulnerable Gulf producers to strait disruptions. With oil exports accounting for roughly 90 percent of its state revenue, the country has historically relied heavily on the Hormuz route. As passage through the strait faces hurdles, Iraq has been forced to trim oil production while seeking to diversify its export channels, including routes via Türkiye and Syria, to reduce its reliance on Gulf shipping lanes.
Quick Facts – Powered by AI
- Q: What new oil delivery method has the Iraqi Oil Tanker Company implemented?
A: The Iraqi Oil Tanker Company has transferred 2 million barrels of crude oil through the Strait of Hormuz using a ship-to-ship transfer method to deliver oil to buyers waiting outside the waterway. - Q: Why did Iraq start using ship-to-ship transfers for oil exports?
A: Iraq adopted ship-to-ship transfers to provide greater leverage and flexibility in sales and pricing, and to encourage buyers to pick up cargo outside the Strait of Hormuz due to disruptions caused by regional conflict. - Q: What discounts did Iraq offer to encourage oil buyers, and how did competitors respond?
A: Iraq offered discounts of over 20 U.S. dollars per barrel, but competitors like Kuwait and Qatar undercut Iraq by offering discounts of up to 35 U.S. dollars per barrel. - Q: How have Saudi Arabia and the United Arab Emirates addressed shipping challenges in the region?
A: Saudi Arabia and the United Arab Emirates have already adopted ship-to-ship transfers to bypass the Strait of Hormuz. - Q: What steps is Iraq taking to reduce its reliance on the Strait of Hormuz for oil exports?
A: Iraq is seeking to diversify its export channels by exploring routes via Türkiye and Syria and has trimmed oil production to reduce reliance on Gulf shipping lanes.
