Iraq Announces Transfer of Two Million Barrels of Oil Outside the Strait of Hormuz for the First Time in Decades

Iraq announced on Saturday the transfer of two million barrels of Iraqi crude oil via a giant VLCC tanker outside the Strait of Hormuz, in a move that shifts part of the oil sales operations from the delivery format at the port of Basra to transport outside the strait, for the first time in decades.

Ali Qais, the General Director of the Iraqi Oil Tankers Company, told the Iraqi News Agency (INA) that the company "held several discussions with specialized companies and was able for the first time to secure a giant VLCC tanker, which was loaded with two million barrels of crude oil and transported outside the strait, allowing the Oil Marketing Company to benefit from better selling and pricing opportunities."

He added that Iraq is seeking to purchase and own specialized tankers for transporting crude oil.

Iraq faces difficulties in shipping oil more than some of its neighbors due to its geographical location being farther from the Strait of Hormuz. In light of Baghdad's lack of a large fleet of its own, it resorts to offering sharp discounts to encourage buyers to continue transporting barrels across the Arabian Gulf, despite the ongoing risks facing ships.

The Iraqi government oil marketing company offered buyers contractual supplies of crude for October, with discounts of up to $37 per barrel compared to regional benchmark prices, according to Bloomberg.

Iraq and Syria are launching a two-way energy corridor after navigation disruptions in the Strait of Hormuz, as imported gasoline is transported by sea to Baniyas before being transferred overland to Iraq.

Iraqi Prime Minister Ali Al-Zaydi directed in August to expedite the implementation of the oil export pipeline project extending from Basra in the south to Fish Khabur in the Kurdistan region of Iraq, and from Haditha in Anbar province to Baniyas in Syria.

The spokesman for the Iraqi Ministry of Oil, Salem Al-Rakabi, stated in August that the construction of a new oil pipeline from Basra fields to Haditha, with subsequent extensions to Baniyas in Syria and Ceyhan in Turkey, could take two to three years after signing the agreement, according to Bloomberg.

The pipeline is expected to have a capacity of two million barrels per day, at a cost of approximately $15 billion. The companies that signed a memorandum of understanding with the Ministry of Oil regarding the pipeline will finance the project.

In July, Iraq and Syria, under U.S. sponsorship, signed a memorandum of understanding to rehabilitate and operate the "Kirkuk-Baniyas" oil pipeline, in a move aimed at reviving one of the most prominent energy infrastructure projects in the region.