Iraq offers May-loading crude at deep discounts for loading inside Hormuz

• Basrah Medium crude offered at discounts of $26-$33.40 per barrel to its May official selling price, while Basrah Heavy crude discounted by $30 per barrel
• Iraqi crude exports averaged 3.33 million barrels per day in 2025, mostly shipped to Asia, but only two vessels loaded at Basrah port in April
• Cargoes are sold on a free-on-board basis at terminals located inside the Strait of Hormuz, with pricing determined by final destination

Summary

Key Development:

Iraq's state oil marketer SOMO is offering May-loading crude at unprecedented discounts to term buyers for cargoes loading inside the Strait of Hormuz, which has been largely blocked due to Iran conflict.

Pricing Details:

• Basrah Medium crude: discounted $33.40/barrel (May 1-10 loading) and $26/barrel (May 11-31 loading) to May official selling price (OSP)
• Basrah Heavy crude: discounted $30/barrel to May OSP
• Cargoes sold FOB at Basrah Oil Terminal or Single Point Moorings, both inside Hormuz Strait

Market Context:

The steep discounts reflect mounting pressure on Iraqi crude exports as shipping risks intensify in the Strait of Hormuz, a critical global oil artery. Iraq's crude exports averaged 3.33 million barrels per day in 2025, primarily destined for Asian markets according to Kpler data.

Export Disruption:

Only two vessels loaded at Iraq's Basrah port in April—one successfully passed through Hormuz while the other remained stuck, highlighting severe shipping constraints.

Market Implications:

The substantial discounts signal Iraq's urgency to maintain export flows despite geopolitical risks. Buyers willing to assume transportation risks through the contested waterway can access Iraqi crude at significant savings. This pricing pressure underscores broader supply chain disruptions affecting global oil markets, with the Iran conflict creating a two-tier pricing system based on loading location and route risk. The situation threatens Iraq's market share and revenue, while potentially benefiting Asian refiners capable of managing elevated shipping risks.