Iraq Boosts Oil Exports as Discounts Attract Global Buyers

Iraq significantly increased its crude oil exports in August, while shipments scheduled for September are also expected to rise as attractive pricing and improved tanker access encourage international buyers, according to several media reports. The recovery marks a notable improvement for Iraq, OPEC’s second-largest oil producer, whose exports had been severely disrupted by the near-closure of the Strait of Hormuz following the outbreak of the Iran war on February 28.

Iraqi oil exports climbed to approximately 2.34 million barrels per day (bpd) in August, compared with around 1.35 million bpd in July, according to two Iraqi energy officials cited on Wednesday. According to several media reports, Iraqi crude exports were estimated at 2.3 million bpd and 2.17 million bpd, respectively, in August. Both figures were considerably higher than July levels, although they remained below February’s pre-war exports of approximately 3.7 million bpd and 3.362 million bpd.

The improvement has increased the availability of heavy, high-sulphur Iraqi crude for major consumers, particularly China and India. Another important development has been Tehran’s decision to allow a number of Iraqi oil tankers to transit the Strait of Hormuz. Iran’s state news agency IRNA reported the approval last week.

It remains unclear whether the permission covers all Iraqi oil cargoes. However, Iraq is currently the only Gulf producer that has explicitly received such authorization, giving its exporters a potentially important logistical advantage over competing suppliers.

WIDE PROFITS FOR TRADERS

Iraq’s state oil marketer SOMO offered August-loading cargoes from the Basrah terminal at discounts of approximately $25–$30 per barrel on a free-on-board basis, according to media reports. The unusually deep discounts attracted major buyers and trading companies, including PetroChina, Zhenhua Oil, TotalEnergies, Vitol, Trafigura, Mercuria, and Cathay Petroleum.

Traders could reportedly generate profits of around $10 per barrel after accounting for shipping and insurance expenses estimated at approximately $17 per barrel, provided the crude could subsequently be resold at premiums.

PetroChina loaded around 6 million barrels from the Basrah terminal during July and August, according to another source. The Chinese company also chartered the very large crude carrier Yuan Gui Yang, which loaded approximately 2 million barrels of Basrah crude from the VLCC Jamaica Prosperity near Malaysia’s Linggi port on August 22.

The Jamaica Prosperity, also chartered by PetroChina, had loaded the crude at the Basrah terminal on August 6. The Yuan Gui Yang is expected to discharge the cargo in Myanmar this week for PetroChina’s refinery in Yunnan province. Several tankers owned or managed by Sinokor, ADNOC Logistics & Services, Bahri, and Kylades Maritime also loaded crude at Basrah during August.

Product and Chemical Commodity Price Impact

The rise in Iraqi crude exports should increase the availability of heavy, high-sulphur feedstock for Asian refiners, particularly in China and India. Greater crude availability and deeply discounted Basrah barrels could ease feedstock costs for refineries, potentially putting modest downward pressure on petroleum-derived chemical commodities such as naphtha, aromatics, and olefins if lower crude costs translate through the value chain. However, the impact may remain limited because Iraqi exports are still below pre-war levels and Strait of Hormuz risks remain. For commodities tracked by Chemanalyst, prices could therefore face mild bearish pressure, while improved refinery economics may support downstream operating rates and product supply.