FINWIRES · TerminalLIVE
FINWIRES

Market Chatter: Iraq's Crude Discounts Shrink as Shipping Costs, Strait Risks Persist

By

Iraq is having difficulty selling its Persian Gulf crude this month after SOMO reduced discounts, following months of lower-priced offers intended to offset elevated shipping costs and risks in the Strait of Hormuz, Bloomberg reported Monday, citing a document and traders.

State oil marketer SOMO cut September discounts for Basrah Medium and Heavy by $9 per barrel to $10/bbl from August levels. For September, the grade carried a $15/bbl to $18/bbl discount against the benchmark, narrower than the $25/bbl to $27/bbl range in August.

Several traders said the reduced discounts do not offset elevated shipping costs and continued navigation risks, according to the report. SOMO did not immediately reply to' request for comment.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Related Articles

Oil & Energy

Weekly Crude Update: Oil Headed for Weekly Gains on Middle East Tensions Ahead of OPEC+ Meeting

Crude benchmarks rallied this week as robust domestic demand drained US crude and gasoline reserves, while persistent chokepoint vulnerabilities in the Strait of Hormuz and evolving supply dynamics kept markets on high alert heading into the weekend OPEC+ ministerial meeting.West Texas Intermediate settled at $91.24 per barrel, up from $83.44/bbl the previous week, while Brent closed at $95.83/bbl, down from $89.37/bbl a week earlier.The global crude benchmarks, including both Brent and West Texas Intermediate, gained 5% and 7% each on a weekly basis so far this week, supported by supply concerns stemming from geopolitical friction between the US and Iran.Geopolitical tensions dominated market sentiment as military exchanges between the US and Iran rattled the Persian Gulf, analysts said.Reports of strikes hitting regional targets and defensive interceptions over the Gulf states reignited anxieties about maritime transit through the Strait of Hormuz.Although daily shipping volumes have occasionally attempted recoveries, persistent threats and localized attacks on commercial tankers have left flows constrained, leading analysts to warn that prolonged disruptions could drive risk premiums much higher."Escalation is propping up crude, but the rally may lose traction if Hormuz shipments keep moving smoothly," ING analysts said.On the supply side, according to the official US Energy Information Administration report for the week ending August 28, commercial crude oil inventories fell significantly by 4.5 million barrels down to 424.5 million barrels, remaining about 1% above the 5-year seasonal average.Simultaneously, data from the Strategic Petroleum Reserve showed inventories decreasing to 286.6 million barrels.Attention has focused squarely on the upcoming OPEC+ ministerial meeting to evaluate output paths and baselines.Ahead of the meeting, Saudi Aramco announced its official selling prices for October, keeping flagship Arab Light crude flat at a $2 per barrel discount to the Oman/Dubai average for Asian buyers.However, October OSPs to Asia for Arab Medium and Arab Heavy were each raised by $1 a barrel, while pricing for Northwest Europe and the Mediterranean remained unchanged.In Latin America, Venezuela captured major market focus following landmark energy agreements finalized with US oversight.These agreements, which assign greenfield development rights in the Orinoco Belt's Carabobo and Ayacucho areas, aim to modernize infrastructure and double Venezuelan crude production to roughly 600,000 barrels per day."The binary nature of the near-term oil price outlook and any changes in geopolitical relations can create significant volatility. We also expect oil prices to ease towards [$]70/bbl over the next 12 months as transit conditions normalise, alongside a sizeable supply surplus expected in 2027," Standard Chartered said in a note dated Friday.

Oil & Energy

US Oil Update: Crude Holds Gains As Geopolitical, Supply Risks Stay in Focus

Crude oil futures held steady in after-hours trading on Friday, but were on track for a weekly gain, as markets weighed renewed US-Iran hostilities against signs that crude supplies have so far weathered the latest escalation, while disruptions linked to the war in Ukraine added pressure to fuel markets.Front-month West Texas Intermediate futures eased 0.12% to $91.40 per barrel, while Brent futures were up 0.67% to $96.18/bbl.Soojin Kim, research analyst at MUFG, said oil headed for its strongest weekly gain since July as renewed US-Iran hostilities revived concerns over prolonged disruption to energy flows via the Strait of Hormuz.On Friday, President Trump said that the US may hit Iran's Pickaxe Mountain very soon, without giving further details. Pickaxe Mountain, located near Iran's Natanz uranium enrichment facility, is a heavily fortified site that reportedly hosts two deeply buried tunnel complexes.Iran's military said on Thursday it targeted US bases in Kuwait and the UAE, the state-run Tasnim News Agency reported. Kuwait said it responded to missile and drone threats, but the UAE hasn't announced any incidents.The US's attacks on Iran earlier this week marked the fiercest clashes between Tehran and Washington since July. Israel also signaled preparedness to return to fighting if necessary, fueling concerns that the ongoing conflict could widen, according to media reports.The US Treasury imposed new Iran-related sanctions on a small Turkish investment bank and two subsidiaries as the Trump administration ramps up economic pressure on Iran."Financial institutions continue to find out the hard way that we are serious about Operation Economic Outcast," US Treasury Secretary Scott Bessent said in a statement.Bessent also said that since the US reinstated its blockade, no Iranian crude cargoes had successfully transited the Strait of Hormuz to China, leaving oil stranded aboard vessels inside the waterway and limiting Tehran's ability to replenish inventories.Iran's ability to export crude has been increasingly constrained by the disruption, Treasury said, describing the combination of stranded oil, limited storage capacity and declining revenues as a growing pressure point for Tehran.Meanwhile, Trump's envoys Steve Witkoff and Jared Kushner are set to travel to Moscow and Kyiv this weekend for talks aimed at ending the war, according to media reports. Ukrainian drone strikes on Russian energy infrastructure have squeezed global energy supplies in the recent past.On the demand front, the price of diesel fuel hit a record Friday, as truckers in the US are paying an average of $5.85 per gallon nationwide, a 60% increase compared to the same period a year ago when diesel cost $3.71 per gallon.ING strategists said that unless Persian Gulf and/or Russian diesel flows recover, the market is likely to tighten further as we head towards winter.Going forward, market participants will be closely following OPEC+'s meeting on Sunday, where the producer group is expected to leave its oil output policy unchanged for October.OPEC+ is likely to favor higher output, Bjarne Schieldrop, chief commodities analyst at SEB Research, said, adding that the prospect of further managed supply increases by the producer group adds to downside risks for oil prices in 2027/28.

Oil & Energy

Market Chatter: Iraq Moves to Secure Tankers as It Steps Up Crude Export Efforts

Iraq is seeking multiple tankers to move crude through the Strait of Hormuz as Baghdad seeks export options, Reuters reported Friday, citing a government spokesman.The government has begun the tanker-hiring process through the state-run Iraqi Oil Tankers Company following cabinet approval, the report said. It did not identify the companies involved.Iraq could use the vessels to collect crude in the Gulf of Oman, where regional producers increasingly sell barrels for pickup, the report said. Iraq's Ministry of Oil and Iraqi Oil Tankers Company did not immediately reply to' request for comment.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)