UAE's ADNOC Buys Millions of Barrels of Discounted Iraqi Crude, Sources Say

Abu Dhabi National Oil Co (ADNOC) has bought millions of barrels of discounted crude oil from Iraq's state oil firm, positioning itself as a major trader amid regional supply disruptions. According to multiple sources familiar with the matter, ADNOC's trading unit was the biggest lifter of Iraqi crude in August and September.

Details of the Transactions

The purchases from Iraq's State Oil Marketing Organization (SOMO) involved significant volumes at steep discounts, according to Iraqi energy sources. The specific figures reported vary slightly between sources but point to a substantial increase in ADNOC's activity.

• In August, ADNOC reportedly agreed to buy 32 million barrels at discounts ranging from $24.90 to $27 a barrel. One source noted that due to export constraints, the actual volume lifted was 20 million barrels.
• For September, an agreement was made for a further 40 million barrels, with some tranches discounted by as much as $25 a barrel. So far, 14 million barrels have been lifted this month.
• A third source stated ADNOC bought about 20 million barrels for lifting between September and October at discounts of $25 to $27 a barrel.

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Market Context and Strategy

These large-scale purchases underscore ADNOC's strategy to expand its role as a global energy trader. By securing discounted barrels, the company can capitalize on pricing dislocations in the physical oil market, particularly as the source material links the activity to supply disruptions from the ongoing Iran war.

For Iraq, the sales provide a critical boost to its export volumes, which had been severely curtailed in previous months. The attractive discounts have drawn in a wide range of buyers beyond ADNOC. According to trade sources, other major firms purchasing Iraqi crude include Chinese state majors PetroChina and Zhenhua Oil, France's TotalEnergies, and commodity trading houses Vitol, Trafigura, and Mercuria.