Iraq Sends a VLCC Beyond the Strait of Hormuz for the First Time in Decades

Iraq's state-owned tanker company, Iraqi Oil Tankers Co, arranged the transport of 2 million barrels of Iraqi crude aboard a VLCC (very large crude carrier) beyond the Strait of Hormuz, something the company had not done in decades. The company's general manager, Ali Qais Abdul Jabbar, confirmed the operation on Saturday in remarks posted on the Ministry of Oil's Facebook page and reported by the state news agency INA.

Until now, buyers of Iraqi crude sent their own supertankers to the port of Basra, near the head of the Persian Gulf, to lift the cargo. With this operation, it is the Iraqi company that charters the vessel and takes on responsibility for sailing it beyond the strait. According to Qais, this gives the State Oil Marketing Organization (SOMO) more options and greater flexibility to negotiate prices, by being able to reach refineries that are unwilling to send their own vessels through Hormuz, and to reduce the discounts needed to attract buyers to the southern terminals.

The move comes amid a race among Middle East oil producers to secure tankers that would allow them to restore crude and fuel flows through the strait, following disruptions caused by the conflict with Iran. The shipping arm of Abu Dhabi National Oil Co. is among the companies also expanding its fleet capacity. In this context, Iraqi Oil Minister Basim Mohammed Khudair told the state news agency that the country is seeking financing to purchase its own tankers, although he did not specify how many, noting that fleet ownership would support exports and increase financial returns.

Last month, Iraq's crude exports averaged about 2.6 million barrels per day in the period through September 21, according to the ministry, up from 2 million barrels per day in August but still below the pre-war level of 3.3 to 3.5 million barrels per day. Baghdad is also pushing alternative export outlets, including the northern route through Turkey and a pipeline project to the Syrian port of Baniyas.

According to the released information, Iraq had previously obtained permission from Iran for its tankers to transit the Strait of Hormuz, a passage Iran effectively closed during its conflict with the United States. Qais also noted that the company has been instructed to contact the relevant authorities to seek opportunities for the purchase and ownership of specialized tankers as soon as possible, with the aim of strengthening its position against other shipping lines in the region.