Iraq Oil Exports Jump 73% On Hormuz Nod, PetroChina And Reliance Lift 10 Mn Barrels

Iraq's oil exports surged in August and are expected to rise further in September, helped by wide profit margins and Iran's approval for Iraqi tankers to pass through the Strait of Hormuz, according to a Reuters report.

The recovery marks a turnaround for OPEC's second-largest producer, whose exports had been severely hit by the near-closure of the Strait of Hormuz since the Iran war began on February 28. The improved flow is easing the supply crunch of heavy, high-sulphur crude for major buyers China and India.

Exports Nearly Double From July

Iraq's oil exports climbed to around 2.34 million barrels per day in August, up from about 1.35 million bpd in July, two Iraqi energy officials said, according to multiple reports. Provisional data from shiptracking firms Vortexa and Kpler put Iraqi crude exports in August at 2.3 million and 2.17 million bpd respectively, both higher than July but still short of the pre-war level of over 3.3 million bpd recorded in February.

Iran's state news agency IRNA reported last week that Tehran had granted permission for several Iraqi oil tankers to pass through the Strait of Hormuz. It remains unclear whether the approval covers all Iraqi cargoes, but Iraq is currently the only Gulf producer to have received such a permit, the report said.

Iraqi state oil marketer SOMO offered August-loading cargoes from the Basrah terminal at discounts of $25 to $30 a barrel on a free-on-board basis, Reuters reported. The steep discounts attracted buyers including Chinese state majors PetroChina and Zhenhua Oil, along with TotalEnergies, Vitol, Trafigura, Mercuria and Cathay Petroleum.

Traders could earn profits of around $10 a barrel after accounting for shipping and insurance costs of about $17 a barrel, if the oil was resold at a premium, the report added.

PetroChina, Reliance Among Major Lifters

PetroChina loaded 6 million barrels from the Basrah terminal in July and August combined. The company also chartered the very large crude carrier Yuan Gui Yang to pick up close to 2 million barrels of Basrah crude from the VLCC Jamaica Prosperity off Malaysia's Linggi port on August 22, according to Kpler data. The Jamaica Prosperity, also chartered by PetroChina, had loaded at the Basrah terminal on August 6. The Yuan Gui Yang is expected to discharge its cargo in Myanmar this week for PetroChina's refinery in Yunnan province, LSEG data showed.

Several tankers owned or managed by Sinokor, ADNOC Logistics & Services, Bahri and Kylades Maritime also loaded cargoes at Basrah in August, the Reuters report said.

In India, Reliance Industries received 4 million barrels of Basrah crude in August, the report added citing Kpler data. Reliance has also chartered a very large crude carrier at a record freight rate to transport Iraqi crude. Separately, an official at Bharat Petroleum Corp said last week that the company expects to receive its first Iraqi oil cargo of the current fiscal year soon.

Chinese refiners have already purchased at least 16 million barrels of Basrah crude for September arrival. Rongsheng Petrochemical, China's largest independent refiner, bought half of this volume from Vitol and Total at close to $10 a barrel above Dubai quotes for delivery to China, the report added. Another refiner, Shenghong Petrochemical, secured 2 million barrels of Iraqi crude for September delivery at around $8 a barrel over ICE Brent.