Iraq Opens Alternate Oil Pickup Route Outside Hormuz For First Time Since War Began

For the first time since war between Israel and Iran broke out, Iraq has given crude buyers the choice to collect cargo from a location outside the Strait of Hormuz. Iraq’s state oil marketer, State Oil Marketing Organisation (SOMO), is reportedly offering Basrah Medium and Basrah Heavy grades for ship-to-ship transfer off the Omani coast in September, with bids due by 28 August.

This is SOMO’s second tender in as many weeks. The first, issued on 25 August, still required tankers to enter the Strait of Hormuz and load directly from the Basra terminal.

A Reversal On Discounting

The pivot stands out because Baghdad had spent the war months doing the opposite, paying buyers to stay inside the Gulf. Reports had flagged discounts running $25 to $27 a barrel on Basrah Medium and $27.80 to $29.80 on Basrah Heavy, all to keep cargoes moving from within the strait despite the risk.

Oil Ministry spokesman Salim Al-Rikabi told Bloomberg that Iraq now has arrangements with shipping firms to move crude via secure alternate routes, framing it as a move to maximise government revenue.

Vitol and TotalEnergies rank among the traders who kept Iraqi oil flowing throughout the conflict. TotalEnergies chief Patrick Pouyanne confirmed this week that his firm is one of the largest handlers of Iraqi barrels.

Volumes Recovering, But Still Below Normal

Export data tracked by Argus Media shows southern Iraqi shipments climbing to around 1.4 million barrels a day in July, a sharp jump from roughly 500,000 bpd in June and barely 100,000 bpd in May.

Even so, that's well under the 3.3 million-plus bpd Basrah used to move before disruptions hit. Bloomberg noted tankers have been sailing the strait with transponders switched off to stay under the radar.

That steady flow has helped keep a lid on global crude prices despite the lingering threat of an attack in the waterway. A separate SOMO fuel oil tender last week also gave buyers the choice of loading inside or outside the Gulf.

A Pipeline Bet On The Mediterranean

Iraq is also working on a longer-term solution to reduce its reliance on the Strait of Hormuz. Oil Minister Basim Khudair met officials from Qatar’s UCC Holding in Baghdad to discuss two pipeline projects that could create alternative export routes to the Mediterranean.

The projects include the Basra-Haditha-Fishkhabur pipeline to Turkey and the Haditha-Baniyas pipeline to Syria. Discussions covered the technical framework, project timelines and contractual structure, according to Iraq’s Oil Ministry.

Khudair also called for faster progress and requested weekly meetings between Iraqi authorities and the consortium to finalise the pipeline routes and economic structure.

Crude prices slipped on Friday, putting Brent crude and West Texas Intermediate (WTI) on track for their first weekly loss in three weeks, at around $89 and $83 a barrel, respectively.

Also Read - Ather Energy Rallies 5% As ₹1,758-Crore Block Deal Signals Hero MotoCorp Stake Hike