Iraq boosts oil exports in August as low prices draw buyers

In August, Iraq's oil exports experienced a significant boost, with September volumes anticipated to increase further. The surge in exports was driven by low oil prices, Iranian approval for Iraqi tankers to pass through the Strait of Hormuz, and discounts offered by Iraq's state oil marketer, SOMO, according to industry sources and shipping data.

Iraq's second-largest oil producer, Iraq, had seen its exports curtailed due to the Strait of Hormuz's near-closure since the onset of the Iran war on February 28. The recovery in exports improved the supply of heavy, high-sulphur crude to major importers like China and India. August saw Iraq's oil exports reaching approximately 2.34 million barrels per day (bpd), up from about 1.35 million bpd in July, as reported by two Iraqi energy officials.

Provisions from shiptracking firms Vortexa and Kpler pegged Iraqi crude exports in August at 2.3 million and 2.17 million bpd, respectively, up from July but below the pre-war levels in February of 3.7 million and 3.362 million bpd. Iraq has been offering heavy discounts, which has encouraged buyers to find shipping options to transport the cargoes.

The Iranian approval for Iraqi tankers to pass through the Hormuz Strait encouraged buyers like Chinese state majors PetroChina, Zhenhua Oil, TotalEnergies, Vitol, Trafigura, Mercuria, and Cathay Petroleum, amongst others, to import Iraqi crude. Discounts of $25 to $30 per barrel on a free-on-board basis by Iraq's state oil marketer SOMO further incentivized buyers to import Iraqi crude. Indian refiner Reliance Industries also received 4 million barrels of Basrah crude in August.