“It will end in two months”… Discounts on Iraqi oil due to the Strait of Hormuz
Trade sources reported on Tuesday that the Iraqi State Oil Marketing Company (SOMO) has offered significant discounts on official selling prices for Basra Medium and Heavy crude to contracted buyers, with the aim of encouraging oil imports from its terminal in the Gulf during the month of July. An oil expert confirmed that these discounts came as a result of the exceptional circumstances related to the Strait of Hormuz crisis, and will gradually decrease. Iraqtravel guides
Reuters, citing reliable trade sources, reported that the discount on Basra Medium crude ranged between $14 and $16 per barrel, while the discount on Basra Heavy crude ranged between $16.80 and $18.80 per barrel, depending on the loading period.
She added that discounts are greatest for shipments loaded between July 1 and 5, before decreasing for shipments loaded between the 6th and 10th of the month, and then for shipments between July 11 and 31.
The agency noted that SOMO had asked buyers to submit their requests for the required quantities within one day of receiving the letter, while quoting trade sources as saying that large discounts might encourage buyers, but questions remain about the possibility of crossing the Strait of Hormuz to transport the shipments.
Commenting on this, oil expert Hamza al-Jawahiri told Shafaq News Agency that the Iraqi Oil Marketing Company indicated that some purchasing companies have become reluctant to buy Iraqi shipments or are hesitant to purchase them due to tensions related to the Strait of Hormuz crisis.
Al-Jawahiri added that Iraq preferred to sell oil at limited discounts rather than stop sales, because continuing exports is better than stopping them completely, expecting that these measures would not last more than one to two months.
He explained that the discounts will begin to gradually decrease as fears subside and purchasing activity returns to normal, so that Iraqi oil selling prices return to their usual levels.
On Tuesday, Iraqi crude oil prices fell, coinciding with a decline in global oil prices.
Basra Heavy crude fell to $60.66 a barrel, down $0.39 or 0.64%, while Basra Medium crude dropped to $62.76 a barrel, down $0.39 or 0.62%.
Globally, Brent crude futures fell to $72.74 a barrel, down 0.56%, while West Texas Intermediate crude dropped to $70.50 a barrel, down 0.28%.
The daily charter rate for a supertanker to ship two million barrels of crude oil from the Middle East to China rose to about $300,000 from about $220,000 on February 27, before the United States and Israel launched strikes on Iran, but data from the London Stock Exchange Group indicates that it has fallen from its peak of nearly $600,000 last March.
Last week, SOMO issued a tender for the sale of crude oil scheduled to be loaded in July, but another source said the company did not receive interest from buyers due to the difficulties traders faced in booking oil tankers to enter the Gulf.
Other Middle Eastern oil producers are continuing to load oil, but shipping traffic in the Strait has slowed following new attacks on vessels and renewed strikes between the United States and Iran in the past few days.
Shafaq.com