Iraq's State Oil Marketing Organisation, SOMO, has sharply cut crude prices for May liftings that must transit the Strait of Hormuz. According to a SOMO notice seen by Bloomberg News, the OPEC producer's flagship Basra Medium crude is being offered at USD 33.40 per barrel below official prices. The Strait of Hormuz has been nearly impassable since the war began in late February.
Iraq, one of the region's leading producers, started cutting output early in the conflict as storage capacity filled rapidly with halted Persian Gulf exports. According to ship-tracking data compiled by Bloomberg, the number of vessels loading oil at the southern port of Basra fell from 12 in March to 2 in April, mainly because empty tankers cannot enter the Persian Gulf via the Strait of Hormuz. Basra normally handles up to 80 tanker liftings per month.
Iraq continues to ship some crude via a pipeline through Türkiye, but the volumes are a small fraction of what would normally move by ship. The SOMO notice told buyers that if they accept the May terms, "the offer is being made under existing exceptional circumstances already known to all parties, and force majeure will not apply to this offer."
On the discount calendar, Basra Medium loaded between May 1 and May 10 carries the USD 33.40-per-barrel discount, narrowing to USD 26 for the rest of the month, while Basra Heavy is priced at USD 30 below official prices. The pricing move stands out as an operational step to share war-related shipping risk and keep long-term buyers on the route.
Key Takeaways:
1. Iraq's SOMO has set a USD 33.40-per-barrel discount on Basra Medium for May liftings.
2. Tanker loadings at Basra dropped from 12 in March to 2 in April as the Strait of Hormuz remained near-impassable.
3. The port can normally handle up to 80 tanker liftings per month.
4. The discount is USD 33.40 per barrel for May 1-10 liftings and narrows to USD 26 for the remainder of the month, while Basra Heavy is priced at USD 30 below official levels.
5. SOMO said force majeure will not apply to this offer because it is being made under exceptional circumstances already known to buyers.
