Iraq confirms ADNOC buying its crude for cloaked Hormuz transit

Iraq's state oil marketer SOMO has confirmed that Abu Dhabi National Oil Company is among the buyers of its crude, with cargoes moving through the Strait of Hormuz using a "shuttle" system that has become the Gulf's primary method of exporting oil amid the ongoing regional conflict.

Ali Nizar, director-general of SOMO, confirmed in a text message that "ADNOC is one of the buyers SOMO deals with," according to Bloomberg. Iraqi crude exports have recently climbed to around 2 million barrels per day, up from the 1.5 million to 1.7 million barrels per day estimated by Iraq's oil minister the previous week.reuters+3

The Shuttle System

ADNOC's method involves tankers making short voyages through the strait, often with transponders switched off, before transferring cargoes to larger vessels waiting outside the Persian Gulf near Fujairah or off Oman's coast. The approach, once associated primarily with sanctions evasion by Iranian and Russian vessels, has become standard practice for commercial operators moving legitimate Gulf crude.caliber+2

Until now, trading house Vitol and TotalEnergies ↗ 2.03% had been the main carriers of Iraqi crude. ADNOC's entry expands Baghdad's export options at a time when SOMO has been offering steep discounts — as much as $25 to $30 per barrel below benchmark prices — to incentivize companies willing to take on the Hormuz risk.ontimebrief+1

ADNOC's Broader Push

The Iraqi arrangement is part of a wider transformation at ADNOC since the UAE's exit from OPEC in May. Reuters Thomson Reuters Corporation ↗ 2.92% reported that ADNOC has sold at least 94 million barrels of oil for delivery through October via seven tenders since June. The company recently purchased 11 ships for $1.3 billion, including six very large crude carriers, to expand its fleet.bairdmaritime

The UAE's share of Middle Eastern oil shipments to Asia rose to 32 percent in June and 27 percent in July, up from 20 percent last year, according to Kpler data cited by Reuters.bairdmaritime

Risks Remain

The shuttle strategy carries real dangers. ADNOC said on August 7 that 15 of its vessels had been attacked by missiles and drones while transiting the strait since the start of the conflict, leaving one crew member dead and 20 injured. Maritime analytics firms report that dark activity now dominates remaining Hormuz traffic, with 57 to 65 percent or more of outbound laden transits occurring with transponders off.energynewsbeat+1

"While we do not comment on specific customers or commercial arrangements, ADNOC continues to see a surge in interest in our crude grades," an ADNOC spokesperson said.bairdmaritime