Abu Dhabi National Oil Co. is offering to transport Iraqi oil exports through the Strait of Hormuz, employing its established dark-transit strategy to move Basrah and other crude grades to refiners across Asia.
The UAE’s state-owned oil company has emerged as the most successful producer in finding ways to move its crude out of the Persian Gulf.
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It has relied on so-called shuttling tactics, in which vessels undertake short voyages — often switching off their transponders to remain undetected — and then generally transfer their cargoes to other ships just beyond the Gulf.
In recent days, Adnoc has offered spot cargoes to buyers in Asia, using the same approach to transport crude produced by other West Asian nations, particularly Iraq.
Shuttling, a method also adopted by some other producers alongside Adnoc, has become an increasingly important way of moving oil out of the Gulf while the Iran war continues, helping to limit the increase in global oil prices. However, it is unusual for countries in West Asia to depend on neighbouring states to assist with transporting their energy exports.
Until now, trading company Vitol Group and French energy major TotalEnergies SE have been the principal carriers of Iraqi crude. Adnoc’s offers may already be influencing export volumes. Ali Nizar, head of Iraq’s state oil marketing company SOMO, said that crude exports had recently risen to approximately 2 million barrels a day this month. That figure is significantly higher than the 1.5 million to 1.7 million barrels a day estimate given by Iraq’s oil minister last week.
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The US and Iran have both taken tougher positions in recent negotiations aimed at reopening the Strait of Hormuz.
However, Pakistan’s defence minister said that the two sides were nearing some form of agreement. The unpredictable nature of the negotiations, along with continued attacks on vessels, has made it challenging for Persian Gulf producers to move their oil exports.
Several Adnoc tankers came under attack while travelling through Hormuz last week. According to reports, offers of oil from traders other than Adnoc have declined this month as tensions across the Persian Gulf have intensified once again.
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Iraq’s SOMO has been offering substantial discounts on its crude to companies prepared to transport the oil through Hormuz. For cargoes scheduled to load this month, discounts have reached as much as $30 a barrel below benchmark prices. For its flagship Basrah Medium crude, the discounts have been between $25 and $27 a barrel.