Abu Dhabi National Oil Co. (ADNOC) is now offering to transport Iraqi oil through the Strait of Hormuz, using a strategy that involves short trips and often disabling ship tracking systems. This method allows ADNOC to move Basrah and other crude oil to refineries in Asia.
The state oil company of the United Arab Emirates has successfully managed to export its crude through the Persian Gulf, utilizing shuttling tactics. These tactics involve moving vessels on brief journeys, typically transferring their cargo to different ships just outside the Gulf, all while keeping their transponders off to dodge detection.
Recently, ADNOC has been making spot offers for crude oil to Asian buyers, using the same method for transporting oil from other Middle Eastern countries, especially Iraq. Indian refiners are among those who have received these offers.
Shuttling has become a key tactic for transporting oil from the gulf amid ongoing tensions stemming from conflicts in the region. This approach helps to manage the impact on global oil prices. It is noteworthy, however, that it is rare for Middle Eastern nations to turn to one another for help with energy exports.
Up until now, the main carriers of Iraqi crude have been trading house Vitol Group and French company TotalEnergies SE. ADNOC's recent offers may already be affecting the market. According to Ali Nizar, head of Iraq's state oil marketing company SOMO, crude exports have surged to approximately 2 million barrels a day this month, compared to earlier estimates of 1.5 million to 1.7 million barrels a day from the oil minister.
ADNOC has stated that they do not comment on commercial matters, and SOMO did not immediately respond to requests for comments.
Both the US and Iran have recently taken firmer stances in negotiations concerning the reopening of the Strait of Hormuz. However, Pakistan’s defense minister noted that some sort of arrangement between the two countries may be close. Continued attacks on ships and the unpredictable nature of the talks have created challenges for Persian Gulf oil producers looking to export their supplies. Several ADNOC vessels were reportedly attacked while passing through Hormuz last week.
Offers from traders other than ADNOC have reportedly decreased this month due to the rising tensions in the Persian Gulf.
Iraq has primarily focused on selling its oil on a loading basis, relying on other companies for transport, according to SOMO’s Nizar. In contrast, ADNOC has expanded its own fleet and also hired vessels from Sinokor Group, the largest owner of oil supertankers in the world.
SOMO has been providing significant discounts on its oil for companies willing to navigate through Hormuz, cutting prices by as much as $30 a barrel below benchmark prices for shipments loading this month. Discounts for its Basrah Medium crude have been between $25 and $27 a barrel.