Breaking

Iraq Offers Up to $33.40-a-Barrel Crude Discount, With Hormuz Transit شرط

Minseung Kang

Summary

Iraq’s state-run State Oil Marketing Organization (SOMO) offered discounts of as much as $33.40 a barrel for Basrah Heavy cargoes loading this month.
The discount is contingent on transit through the Strait of Hormuz, a structure that shifts geopolitical risk and maritime transport risk to buyers.
The market sees the steep discounts as a strategy to maintain export volumes amid supply disruption concerns, though they may also limit actual trade participation.

Iraq has sharply cut crude prices to attract demand amid mounting geopolitical tensions in the Middle East. The offer comes with a requirement that cargoes pass through the Strait of Hormuz, indicating the terms also reflect the risks tied to the route.

Odaily reported on May 5 that Iraq’s State Oil Marketing Organization, or SOMO, offered steep discounts to long-term contract buyers for cargoes loading this month.

According to the notice, Basrah Heavy will be supplied at discounts of as much as $33.40 a barrel. The terms apply to cargoes loading from May 1 through May 10. After that, the discount narrows to about $26 a barrel. Basrah Medium was also offered at roughly $30 below its official price.

The offer includes a clause requiring buyers to receive the crude deep inside the Persian Gulf after passing through the Strait of Hormuz. The condition reflects growing maritime transport risks as tensions rise across the Middle East.

The notice also stated that the pricing terms were presented on the premise of currently known special circumstances and that force majeure would not apply. That structure places clear responsibility on buyers to perform the contract despite geopolitical risks.

The market views the discounts as an effort to preserve export volumes despite concerns about supply disruptions. At the same time, the requirement to transit the Strait of Hormuz could limit actual participation in the trades.