Iraq boosts oil exports in August as low prices draw buyers

• August exports reached 2.17 million bpd, up from 1.32 million bpd in July but still below February's 3.36 million bpd before the Strait of Hormuz crisis began
• Iraq offered steep discounts of $25-$30 per barrel FOB, enabling traders to earn profits of about $10 per barrel after shipping and insurance costs of around $17 per barrel
• Chinese refiners purchased at least 16 million barrels for September delivery, with major buyers including PetroChina, Rongsheng Petrochemical, and trading firms Vitol, Trafigura, and Mercuria

Summary: Iraq Boosts Oil Exports as Low Prices Draw Buyers

Iraq significantly increased its oil exports in August, with shipments reaching 2-2.3 million barrels per day (bpd), up from 1.3-1.6 million bpd in July, according to data from Kpler and Vortexa. However, exports remain well below pre-crisis levels of 3.4-3.7 million bpd in February, before the Iran war on February 28 led to near-closure of the Strait of Hormuz.

Key Developments:

• Iran granted permission for Iraqi oil tankers to pass through the Strait of Hormuz, making Iraq the only Gulf producer with explicit permit
• Iraq offered steep discounts of $25-30 per barrel FOB from its Basrah terminal to attract buyers
• Traders are earning approximately $10 per barrel profit after shipping and insurance costs of around $17 per barrel

Major Buyers:

Chinese state majors PetroChina and Zhenhua Oil, along with trading firms Vitol, Trafigura, Mercuria, and Cathay Petroleum lifted cargoes. PetroChina alone lifted 6 million barrels in July-August. India's Reliance Industries received 4 million barrels in August, with Bharat Petroleum expecting its first cargo soon.

September Outlook:

Chinese refiners purchased at least 16 million barrels of Basrah crude for September delivery. Independent refiner Rongsheng Petrochemical bought half of these volumes at premiums near $10 above Dubai quotes, while Shenghong Petrochemical secured 2 million barrels at approximately $8 over ICE Brent.

Market Implications:

The recovery improves supplies of heavy high-sulfur crude to major Asian importers China and India, though OPEC's second-largest producer remains significantly below pre-conflict export levels.