Iraq's SOMO offers deep discounts for oil loading inside Hormuz, document shows

• Basrah Medium crude discounted $25-$27 per barrel and Basrah Heavy discounted $27.80-$29.80 per barrel to destination benchmarks, depending on loading window
• Visible traffic in the Strait of Hormuz has declined following reports of vessel attacks in the region
• At least two VLCCs are confirmed moving Iraqi crude through the strait, including the Noble (already exited, heading to China) and Jamaica Prosperity (loading around August 3 for PetroChina)

Summary: Iraq Offers Steep Oil Discounts Amid Hormuz Strait Concerns

Key Developments:

Iraq's state oil marketer SOMO has offered significant discounts on August-loading crude oil to incentivize buyers to collect cargoes from inside the Strait of Hormuz, according to a Reuters-reviewed document.

Pricing Details:

• Basrah Medium crude: Discounts of $25-$27 per barrel below destination benchmarks, varying by loading window
• Basrah Heavy crude: Discounts of $27.80-$29.80 per barrel below benchmarks
• Cargoes available on a free-on-board basis from Basrah Oil Terminal and Iraq's single-point moorings

Market Context:

The steep discounts appear linked to reduced shipping traffic through the strategic Strait of Hormuz following reports of vessel attacks. The waterway is a critical chokepoint for global oil flows, and security concerns can deter buyers and increase shipping costs.

Shipping Activity:

• VLCC Noble, which loaded Iraqi crude on July 25, successfully exited the strait on Friday heading to China
• PetroChina chartered VLCC Jamaica Prosperity for Gulf-to-China shipment, with loading scheduled around August 3 at Basrah port

Market Implications:

The substantial discounts suggest Iraq is working to maintain export volumes despite security-related hesitation from buyers. The premium required to compensate for increased risk in the region reflects geopolitical tensions affecting oil logistics. Successful recent shipments may provide some reassurance to the market, though the discounts indicate lingering concerns about operational and insurance costs for vessels transiting the Strait of Hormuz.