UAE’s ADNOC Offers To Shuttle Iraqi Oil Through Strait Of Hormuz To Asian Refiners

Abu Dhabi National Oil Co.’s trading arm is offering to transport Iraqi oil through the Strait of Hormuz using a method it has already used to move crude out of the Persian Gulf, according to people familiar with the matter.

Adnoc has recently offered spot cargoes to buyers in Asia, including Indian refiners, using the same method to transport oil from other Middle Eastern producers, mainly Iraq, the people said.

The offers come as attacks on ships and uncertainty over talks between the United States and Iran have made it harder for Gulf producers to move oil through the Strait of Hormuz.

The people asked not to be named because they were not authorised to speak to the media.

How Adnoc is Moving Oil Through Hormuz?

Adnoc has been one of the most successful Gulf producers in getting its crude through the Strait of Hormuz during the current crisis.

It has used what is known as a “shuttling” method. Under this approach, vessels make short trips through the waterway, often with their transponders turned off to avoid detection. The cargo is then usually transferred to another vessel outside the Gulf.

Some other producers have also used the method. It has become an important way of moving oil out of the Gulf while the Iran war continues.

Using neighbouring countries or companies to help transport their oil exports is unusual for Middle Eastern producers.

Adnoc Could Help Move More Iraqi Crude

Vitol Group and French oil major TotalEnergies SE have so far been the main carriers of Iraqi crude.

Adnoc’s offers could already be helping Iraq increase its exports. Ali Nizar, head of Iraq’s state oil marketing company SOMO, said on Tuesday that crude exports had recently risen to around 2 million barrels per day this month.

That is higher than the 1.5 million to 1.7 million barrels per day estimate given by Iraq’s oil minister last week.

Iraq has generally sold its oil on a loading basis and relied on other companies to transport it, SOMO’s Nizar told a local television station this week.

Adnoc has its own fleet, which it has recently expanded. It has also hired vessels from Sinokor Group, described in the source material as the world’s largest oil supertanker owner.

Hormuz Talks Remain Uncertain

The reported offers come as the United States and Iran continue talks on reopening the Strait of Hormuz.

Both countries have recently taken tougher positions in the negotiations. However, Pakistan’s defence minister said on Tuesday that Washington and Tehran were close to reaching some kind of agreement.

The talks have been stop-start, while attacks on ships have continued. This has made it difficult for Persian Gulf producers to export oil.

Several Adnoc tankers were attacked while travelling through Hormuz last week.

Oil offers from traders other than Adnoc have also slowed this month as tensions in the Persian Gulf increased again, the people said.

Iraq Cuts Oil Prices to Encourage Shipments

Iraq has been offering large discounts to companies willing to transport its oil through Hormuz.

SOMO has offered some crude at prices as much as $30 a barrel below benchmark prices for cargoes loading this month.

For Basrah Medium, Iraq’s main crude grade, the discounts have ranged from $25 to $27 a barrel.

The discounts come as companies face greater difficulty moving Iraqi oil through the Strait of Hormuz.

References: Bloomberg, Rigzone