Iraq is seeking to hire two or more oil supertankers to transport oil through the Strait of Hormuz, as part of an effort for regional producers to have more control over their exports.
The Iraqi Oil Tankers Co. is looking to rent at least two very large crude carriers for 180 days for oil delivery via Hormuz, according to a notice on the oil ministry’s website. The deadline for submissions is Thursday.
In the Middle East, oil producers are in a rush to secure tankers to ensure they can transport crude and refined fuels through this crucial strait. Iraq has already purchased at least two supertankers, one of which was reportedly bought at a record price. A senior official from Kuwait mentioned this week that the country is also actively seeking to buy vessels.
This surge in purchases is particularly significant given that the cost of acquiring ships is currently at a high point. Tanker owners are experiencing one of the largest earnings periods in history, which has led to them demanding very high fees for their vessels.
The efforts to expand fleets follow actions by Abu Dhabi National Oil Co.’s shipping division, which has placed numerous orders for both new and second-hand ships. With the Iran conflict raising global energy security concerns for both producers and consuming nations, securing tankers has become critical.
Countries that own their own fleets have had greater flexibility in transporting oil, including the use of shuttle transits where cargoes are moved from within the Persian Gulf to just outside Hormuz for pickup by another vessel.
Building a fleet would give Gulf producers enhanced control over their logistics, making their exports more resilient against future disruptions.
“We are in the market to acquire more ships,” said Shaikh Khaled Al-Sabah, managing director of international marketing at Kuwait Petroleum Corp during the APPEC conference in Singapore. “Controlling your own fleet gives you an advantage over others.”
Greece's Dynacom Tankers Management recently sold a supertanker to Iraqi buyers for $200 million, which would be the highest price ever paid for such a ship, according to Clarkson Research Services Ltd. Another supertanker was also sold to Iraqi buyers recently. Both transactions remain private, as the individuals involved requested anonymity. Dynacom chose not to comment.
The Iraqi oil ministry did not provide comments on these tanker purchases.
Iraq’s tender specifies that the tankers should be capable of performing ship-to-ship transfers, enabling them to deliver oil to waiting vessels for further transportation to customers after crossing Hormuz. It also mentions that owners wouldn’t be compensated if the ship is unavailable for charter for any reason.
Kuwait is also looking to buy and hire tankers, according to an insider. Recently, it has been bidding for ships at higher prices, as noted by an official in the tanker industry.
The ownership of tankers varies among Middle Eastern producers. Saudi Arabia has a large state-owned tanker fleet, while the UAE’s Adnoc owns vessels and is looking to expand. Other producers, like Kuwait, have smaller fleets, and Iraq owns very few ships. Iran, on the other hand, has significant fleet capacity.
Ibrahim Al Nadhairi, CEO of Oman’s Asyad Shipping, stated in an interview at the APPEC S&P Global Energy conference in Singapore that “the recent crisis highlighted the need for national carriers. It's essential to have in-house capabilities to ensure that when challenges arise, you have your ships ready.”