Bloomberg: Iraq Urgently Searching for Buyers for Its Oil

U.S. news agency Bloomberg reported on Friday that Iraq’s state oil marketing company, SOMO, offered crude oil cargoes to buyers at the last minute because of the complications caused by very high shipping rates to purchase cargoes from deep locations within the Arabian Gulf.

The agency, citing people familiar with the matter, said that the availability of additional oil for purchase — a sign that some traders had withdrawn — prompted SOMO to offer cargoes loading in late September to at least two companies.

According to the U.S. agency, if Iraq cannot find buyers or ships, the disruptions could add upward pressure on crude prices at a time when freight costs are rising sharply and global markets are experiencing severe disruptions.

Bloomberg’s calculations based on Baltic Exchange data show that shipping crude on giant tankers from the Gulf of Oman to East Asia adds about $20 to the price per barrel, roughly one‑fifth of the crude’s value, which currently exceeds $100 per barrel at loading — compared with a tiny fraction of delivery costs before the war.

Because of its more distant geographic position from the Strait of Hormuz, Iraq has faced greater shipping difficulties than some neighbors, relying instead on trading firms to market and move its crude. It has also offered large discounts to incentivize buyers, cutting prices for its Basrah Medium and Basrah Heavy grades in recent tenders.

Competition among Gulf states to sell their oil has led some companies that previously loaded Iraqi oil to switch to other suppliers offering bigger discounts, leaving part of Iraq’s supplies unlifted, Ali Nizar, head of SOMO, said on 20 September.

It was not immediately clear which oil traders had withdrawn from loadings, leading to the additional available crude. Bloomberg said Vitol Group, Trafigura Group, TotalEnergies and the Abu Dhabi National Oil Company had previously been involved in moving Iraqi crude through the Strait of Hormuz.