Sources: Iraq's SOMO Offers Significant Discounts for July Basrah Crude

On June 30, media reports citing multiple trade sources and a related document stated that the Iraq National Oil Marketing Organization (SOMO) is offering substantial discounts off the official selling price to attract long-term buyers to lift Basrah crude from Middle Eastern Gulf ports in July. The discount for Basrah medium crude oil ranges from $14 to $16 per barrel, while the discount for Basrah heavy crude oil is between $16.80 and $18.80 per barrel, with the specific discount amount depending on the loading period. The largest discounts are for shipments loaded from July 1 to 5, with discounts gradually narrowing for shipments from July 6 to 10 and July 11 to 31. SOMO stated that buyers must declare their intended purchase volume within one day of receiving the notification letter. One trade source mentioned that this significant concession is to compensate buyers, as ships navigating the Strait of Hormuz incur high chartering costs. Data shows that the daily charter rate for very large crude carriers capable of carrying 2 million barrels has risen from about $220,000 before the U.S. launched strikes against Iran (on February 27) to around $300,000; however, this rate has decreased from a peak of about $600,000 in March. Additionally, two industry insiders noted that while the discounts for Basrah crude are high, buyers remain concerned about the smooth navigation of the Strait of Hormuz.