According to Bloomberg, Abu Dhabi National Oil Co. (Adnoc) is offering to shuttle exports of Iraqi oil through the Strait of Hormuz, using its dark-transit playbook to transport Basrah and other crude to refiners in Asia. The United Arab Emirates' state-oil company has been the most successful producer at getting its crude out of the Persian Gulf, using so-called shuttling tactics: vessels make short trips — often with transponders turned off to avoid detection — before typically transferring their cargoes to other ships just outside the Gulf.
Adnoc's shuttle tactics in the Persian Gulf
In recent days, Adnoc has offered spot cargoes to Asian buyers using the same method to carry crude from other West Asian producers, most notably Iraq, people familiar with the matter said, asking not to be named as they are not allowed to speak to the media. Shuttling, which has also been used by some other producers as well as Adnoc, has become an important means of transporting oil out of the Gulf even as the Iran war continues, helping to contain the rise in global prices.
According to Bloomberg, shuttling has become an important means of transporting oil out of the Gulf, helping to contain the rise in global prices.
Bloomberg noted it is unusual for West Asian countries to turn to their neighbours to assist with carrying their energy exports. An Adnoc spokesperson said the company does not comment on commercial matters; SOMO did not immediately respond to a request for comment.
Iraqi crude export picture
Until now, trading house Vitol Group and French oil major TotalEnergies SE have been the major carriers of Iraqi crude. Adnoc's offers may already be having an impact. Ali Nizar, the chief of Iraq's state oil marketing company SOMO, said on Tuesday that crude exports had recently jumped to around 2 million barrels a day this month. That compares with a 1.5 million to 1.7 million barrels a day estimate from the country's oil minister last week.
| Metric | Value | Source / timing |
|---|---|---|
| Iraq crude exports, this month | ~2 million bpd | Ali Nizar (SOMO), Tuesday |
| Iraq crude exports, prior estimate | 1.5–1.7 million bpd | Oil minister, last week |
| Basrah Medium discount | $25–$27 per barrel below benchmark | Volumes loading this month |
| Maximum SOMO discount for Hormuz transit | up to $30 per barrel below benchmark | Volumes loading this month |
Shipping implications and pricing
The stop-start nature of talks to reopen Hormuz and continued strikes on ships have made it difficult for Persian Gulf producers to export their oil, according to Bloomberg. Several Adnoc tankers were attacked while transiting Hormuz last week. Offers of oil by traders other than Adnoc have slowed this month as tensions in the Persian Gulf increased again, the people said.
Iraq's SOMO has been offering deep discounts on oil for companies willing to transit Hormuz, slashing prices to as much as $30 a barrel below benchmark prices for volumes loading this month. For its flagship Basrah Medium crude, discounts ranged between $25 and $27 a barrel. For shippers and tanker operators, the discounts effectively price in the additional risk of moving cargoes through a chokepoint where strikes on ships have occurred.
Watch list
- Hormuz negotiation status: The US and Iran have both recently hardened their stances in negotiations to reopen Hormuz, although Pakistan's defence minister said on Tuesday that the two sides were close to some sort of arrangement.
- Tanker security: Several Adnoc tankers were attacked while transiting Hormuz last week; further incidents could disrupt shuttle operations.
- SOMO pricing: With discounts up to $30 a barrel for Hormuz-bound volumes, SOMO may adjust its pricing depending on buyer demand and security conditions.
- Non-Adnoc trader offers: Offers by traders other than Adnoc have slowed this month; a continuation would cement Adnoc's role as the Gulf's main shuttle carrier.
For logistics operators moving Basrah and other Iraqi grades to Asia, the immediate signal is the gap between official SOMO prices and discounted levels offered for Hormuz-bound volumes, with discounts of $25–$27 a barrel on Basrah Medium reported against benchmark for cargoes loading this month, according to Bloomberg. The combination of Adnoc's shuttle offers, SOMO's deep discounts, and last week's attacks on Adnoc tankers underscores the operational risk and pricing dynamics now attached to Strait of Hormuz transits.
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