UAE Shuttles Oil Exports From Iraq Through the Strait of Hormuz

Abu Dhabi National Oil Co. (Adnoc) has proposed transporting Iraqi crude oil exports through the Strait of Hormuz, employing a technique known as "shuttling." This method involves making brief trips to offload their cargo before transferring it to other ships just beyond the Gulf. Adnoc has extended spot offers to Asian buyers, employing the same approach to carry crude from other West Asian producers, particularly Iraq.

This strategy has become crucial for transporting oil out of the Gulf amid the ongoing Iran war, helping to stabilize global oil prices. However, it is uncommon for West Asian nations to rely on their neighbors for assistance in exporting their energy resources. Despite Adnoc's offers, major carriers like Vitol Group and TotalEnergies SE have traditionally managed Iraqi crude exports.

Adnoc's efforts appear to be making a difference, with crude exports surging to approximately 2 million barrels daily this month, up from an estimated 1.5 to 1.7 million barrels daily last week. Tensions in negotiations between the US and Iran to reopen Hormuz, coupled with ongoing attacks on ships transiting the Strait, have hampered Persian Gulf producers' ability to export their oil.

Some Adnoc tankers were targeted while crossing Hormuz last week. Other traders have also reduced their offers due to heightened tensions in the region. Iraq's SOMO has been providing substantial discounts on its oil, slashing prices to as much as $30 below benchmark levels for barrels loaded this month.