Iraq's state marketer SOMO is shopping late-September barrels to at least two firms, according to people with direct knowledge who asked not to be named. The extra availability points to some traders walking away from planned liftings. Failure to line up buyers or tonnage could lift crude prices just as shipping expenses are surging and global markets remain badly dislocated.
Calculations using Baltic Exchange data show that putting a very large crude carrier on the route from the Gulf of Oman to East Asia now adds roughly $20 per barrel. In other words, for cargoes assessed at over $100 a barrel when loaded, that amounts to around one-fifth of the value, whereas it previously made up only a small portion of the pre-war delivered cost. Those transport add-ons make barrels sourced from deep inside the Persian Gulf harder to justify and complicate the purchase.
Because Iraq sits farther from the Strait of Hormuz than some neighbors, it has faced bigger shipping hurdles and leaned more on trading houses to market and move its crude. To keep flows moving, SOMO has offered steep discounts, trimming prices for Basrah Medium and Basrah Heavy in recent tenders. According to SOMO chief Ali Nizar, speaking on Sept. 20 in a video posted to the Iraqi parliament's official YouTube account, competition across the Gulf has been so fierce that companies that previously lifted Iraqi oil shifted to rivals offering deeper price cuts, leaving some Iraqi barrels without takers.
Nizar did not reply to a request for comment that was sent outside business hours on Friday. It is not clear which traders pulled out of loadings. Bloomberg has previously reported that Vitol Group, Trafigura Group, TotalEnergies SE and Abu Dhabi National Oil Co. have helped move Iraqi crude via the Strait of Hormuz.
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When shipping eats a fifth of a barrel's value, it can add upward pressure to crude prices. If Iraq struggles to place cargoes or charter vessels, that tightness can ripple into broader crude prices.
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