Iraq joins Saudi Arabia in offering crude outside Hormuz

Saudi Aramco and Iraq's State Oil Marketing Organization have both launched fresh tenders this week to sell crude oil through ship-to-ship transfers outside the Strait of Hormuz, deepening a logistical workaround that Gulf producers have adopted as regional disruptions continue to choke the world's most important oil chokepoint.

Aramco Expands Offerings to Asia

Aramco offered Arab Medium and Arab Heavy crude for September loading via ship-to-ship transfers off Fujairah in the UAE and Sohar in Oman for a second consecutive week, according to Reuters, citing four sources with knowledge of the matter. The producer has already sold at least 4 million barrels to Chinese buyers this month using the arrangement, with two VLCCs carrying combined cargoes destined for Sinopec China Petroleum & Chemical Corporation refineries at Ningbo and Zhanjiang.oilprice+2

The model splits the voyage in two: Aramco moves Saudi crude through the strait — in some cases with vessel tracking systems switched off — then hands the cargo to a buyer's tanker on the far side. Aramco also sold at least 4 million barrels of heavier grades to PetroChina and Sinochem last week after restarting loadings at Ras Tanura earlier in August.finance.yahoo+1

Iraq's Second Tender in a Week

SOMO issued its own tender on Thursday for Basrah crude cargoes to be loaded via tanker-to-tanker transfers near the Omani coast, with bids closing August 28. Unlike its Monday tender — which required buyers to send vessels through Hormuz to load at Iraq's Basra terminal — the latest offer removes that requirement entirely.shafaq+1

Iraq's southern exports remain far below normal. Shipments averaged about 1.4 million barrels per day in July, up from roughly 500,000 bpd in June, but still well under pre-disruption levels exceeding 3.3 million bpd. Baghdad is also pursuing longer-term alternatives, including pipeline routes through Turkey, Syria, and Jordan.shafaq

A New Normal for Gulf Oil Trade

The proliferation of ship-to-ship arrangements marks a broader shift for the region's producers. Argus Media reported on Monday that multiple Middle Eastern producers were offering more crude through transfers outside Hormuz. Aramco has simultaneously maximized its East-West pipeline to move crude to the Red Sea port of Yanbu and onward through Egypt's SUMED system to the Mediterranean, serving European buyers without traversing the strait.energynewsbeat+2

Tanker rates from the Middle East to China have surged to more than $600,000 a day — a five- to six-fold increase from pre-crisis levels — reflecting the cost and complexity of the new routing. The workarounds keep barrels flowing, but at substantially higher expense and lower volume than the region's pre-disruption trade.energynewsbeat