Iraq oil exports surge amid Hormuz transit approval

Iraq significantly increased its crude oil exports in August, rising to approximately 2.34 million barrels per day (bpd) from 1.35 million bpd in July. This recovery follows a period of severely curtailed production caused by the near-closure of the Strait of Hormuz during the Iran war that began in February.

The surge in exports is attributed to two primary factors: substantial price discounts and transit permissions from Iran. Iraqi state oil marketer SOMO offered August-loading cargoes from the Basrah terminal at discounts of $25 to $30 per barrel. Additionally, Tehran granted permission for a number of Iraqi oil tankers to transit the Strait of Hormuz, providing relief to Baghdad’s export bottleneck.

These increased flows are expected to benefit refiners in China and India, who are specifically geared to process Iraq’s heavy, high-sulphur crude. Major buyers and traders involved include PetroChina, Zhenhua Oil, TotalEnergies, Vitol, Trafigura, and Mercuria.