Iraq Arranges First VLCC Shipment Beyond Hormuz in Decades

Iraq's state tanker company has arranged a very large crude carrier (VLCC) to transport 2 million barrels of crude beyond the Strait of Hormuz, marking a shift in how Baghdad handles its oil exports.

Iraq arranges a 2-million-barrel crude shipment beyond the Strait of Hormuz.

Iraqi Oil Tankers Co. loaded a VLCC and arranged for it to sail through the Strait of Hormuz “for the first time in decades,” Director General Ali Qais Abdul Jabbar said in video comments published by Iraq's Oil Ministry.

Previously, buyers typically arranged for supertankers to collect Iraqi crude at Basra, near the head of the Persian Gulf.

The new arrangement gives Iraq's state tanker company greater responsibility for transporting crude beyond the strait and could allow the country to reach refiners that are reluctant to send vessels through Hormuz during the current disruption.

Moving crude beyond the Gulf could also help Iraq reduce the discounts it offers to attract buyers to its southern export terminals, although the commercial benefit will depend on shipping costs, insurance and market conditions.

Iraq is also seeking funding to purchase additional tankers for its state tanker company, Oil Minister Basim Mohammed Khudair said.

Owning more vessels would give Baghdad greater control over crude deliveries and potentially increase financial returns, according to Iraqi officials.

The company did not disclose the identity of the VLCC used for the shipment, its owner, the final destination or the buyer of the crude. Iraq is also pursuing alternative export routes, including the northern route through Turkey and a proposed pipeline to Syria's Baniyas port.

Iraqi crude exports averaged about 2.6 million barrels a day through Sept. 21, up from about 2 million barrels a day in August but still below prewar levels of approximately 3.3 million to 3.5 million barrels a day.