Iraq Allows Crude Shipments Through Strait of Hormuz

Iraq has informed Asian traders and refiners that its crude oil can now transit the Strait of Hormuz following an exemption granted by Iran. 

The move tests buyers’ confidence in the security of shipments through the vital waterway, which has been effectively closed for nearly a month.

The State Organisation for Marketing of Oil (SOMO) issued a notice on Sunday stating that Iraqi shipments are “exempt from any potential restrictions,” citing media reports. Buyers were asked to provide lifting schedules within 24 hours, including vessel details and requested volumes, with all loading terminals, including Basrah, declared fully operational.

Buyers Exercise Caution Amid Uncertainty

Despite the announcement, buyers remain cautious regarding the arrangement. It is not immediately clear whether the exemption applies to all Iraqi crude or only specific tankers. 

Asian refiners are seeking clarity on conditions, including whether Iraq will provide its own tankers to ensure additional security through the Strait.

Iranian Exemption Confirms Partial Passage

Iran confirmed the exemption but did not specify which vessels or cargoes would be covered. On Sunday, the tanker Ocean Thunder, carrying one million barrels of Iraqi crude, successfully crossed the narrow waterway, marking the first significant transit since the closure.

Iraq’s Export Challenges

Iraq has limited alternatives to Hormuz, aside from a pipeline system that crosses Turkey. The country typically sells oil on a free-on-board basis, leaving refiners responsible for shipping.

Sharp Decline in Exports

The closure caused Iraqi oil exports to plunge approximately 97 percent in March, averaging just 99,000 barrels per day. 

Recent data shows that transits have picked up slightly over the past week, registering the highest seven-day rolling average since the conflict began. 

However, traffic remains minimal compared to prewar volumes, highlighting the strategic importance of Hormuz for global oil flows.

Conclusion

The Iranian exemption allowing Iraqi crude to transit the Strait of Hormuz marks a cautious step toward stabilizing exports in the region. While operational terminals and limited shipments signal progress, buyers remain wary of potential risks, emphasizing the need for clear conditions and reliable shipping security. Iraq’s ability to restore consistent flows will be critical for both regional markets and global oil supply.