Iraq's Oil Exports Rebounded in August on Steep Discounts, Hormuz Passage

Iraq's oil exports saw a significant recovery in August, driven by deep price discounts and a crucial agreement with Iran that allowed tankers passage through the Strait of Hormuz, according to a Reuters report. The rebound partially restores supply from OPEC's second-largest producer, whose shipments had been severely curtailed since late February.

Export Volumes Rise

Iraqi oil exports climbed to approximately 2.34 million barrels per day (bpd) in August, a substantial increase from about 1.35 million bpd in July, the report stated. This recovery helps ease a supply crunch for heavy, high-sulfur crude favored by major importers like China and India.

Data from independent ship-tracking firms corroborated the trend, though with slightly different figures:

• Vortexa tracked August exports at 2.3 million bpd.
• Kpler recorded August exports at 2.17 million bpd.

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Despite the month-over-month increase, August volumes remain well below the pre-conflict levels seen in February, when exports were above 3.3 million bpd.

Key Drivers of the Rebound

The recovery was facilitated by two main factors. First, Iraq's state oil marketer, SOMO, attracted buyers by offering August-loading cargoes from its Basrah terminal at steep discounts of $25 to $30 a barrel on a free-on-board basis.

Second, Tehran granted permission for a number of Iraqi oil tankers to transit the Strait of Hormuz, Iran’s state news agency IRNA reported last week. Access to this critical shipping lane had been sharply restricted since what the source report described as the start of the Iran war on February 28, which had throttled Iraq's export capacity.