Iraq notified buyers to pick up their own oil, saying its crude can be shipped via Hormuz.

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Iraq has sent delivery notices to Asian buyers, stating that its crude oil has been exempted by Iran and is allowed to transit through the Strait of Hormuz, but buyers generally remain cautious as the scope of the exemption is still unclear.

The State Oil Marketing Organization (SOMO) of Iraq issued a notice on Sunday, informing buyers that Iraqi oil shipments are now "exempt from any potential restrictions," requiring buyers to submit lifting plans within 24 hours, including vessel information and requested loading volumes. The notice emphasized that all loading terminals, including Basra, are "operating normally." This is the first sign of resumption for Iraqi crude exports via the Strait of Hormuz after about a month of actual closure.

However, according to Bloomberg, several Asian buyers said they are seeking further clarification, including whether the exemption applies to all Iraqi oil, and whether Iraq will provide its own tankers to enhance transit security guarantees.

Exemption details unclear, buyer confidence uncertain

Last weekend, Iran announced that ships from neighboring Iraq are permitted to use the Strait of Hormuz, but the Iranian military spokesperson did not specify which tankers or cargoes are protected. On Sunday, the tanker Ocean Thunder, carrying 1 million barrels of Iraqi crude oil, completed its transit of the strait, marking the first practical case since the exemption took effect.

According to Bloomberg, Asian buyers remain cautious about this arrangement, demanding clear exemption terms and paying particular attention to whether Iraq is willing to provide national tankers for extra transit security. Iraqi crude is typically sold on a FOB (Free On Board) basis, meaning buyers must arrange their own transportation, bearing all transit risks themselves.

Exports plunge, few alternative routes

The actual closure of the Strait of Hormuz has severely impacted Iraqi oil exports. Data shows that Iraq’s average daily crude exports in March plunged by about 97% to around 99,000 barrels, a sharp contraction compared to the previous month.

Iraq has extremely limited alternative options to bypass the Strait of Hormuz, currently relying solely on a pipeline system crossing Turkey, which cannot handle large-scale export demands. This makes the Hormuz exemption arrangement crucial for the recovery of Iraq’s exports.

According to Bloomberg, tanker traffic through the Strait of Hormuz has rebounded somewhat over the past week, with the seven-day rolling average as of last Saturday rising to its highest level since the outbreak of conflict. However, overall transit volume remains minimal compared to prewar levels, and the market is highly concerned about whether the channel can remain open and stable.

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