Iraq offers steep discounts on oil exports amid Strait of Hormuz risks

Iraq has offered its Basrah crude oil to buyers at much lower prices for loading in May. This is happening because of growing dangers for ships in the Strait of Hormuz. These aggressive price cuts highlight the challenges Iraqi oil exports face. The country wants to keep selling its oil despite these shipping problems.

The state oil marketer, SOMO, is providing these discounts. Buyers can get Basrah Medium crude at GHS 33.40, or about GHS 26 per barrel, less than the official price. This applies to loadings between May 1 and May 10. Another discount is available for loadings between May 11 and May 31. Basrah Heavy crude for May is also being offered with a GHS 30 per barrel discount. All these barrels are sold on a free-on-board basis. This means the buyer takes responsibility for the oil once it's on the ship at the Basrah Oil Terminal.

This situation shows how global shipping risks affect oil markets. The Strait of Hormuz is a very important passage for oil moving around the world. In 2025, Iraq exported an average of 3.33 million barrels of oil each day. Most of this oil goes to countries in Asia. However, recent data from Kpler shows that only two ships were loaded at Iraq's Basrah port in April. One of these ships has passed the Strait, but the other has not yet left. This shows how difficult it has become to move oil safely through the region.

Oil experts suggest that these discounts are a direct response to the shipping disruptions. The ongoing conflict involving Iran has made the Strait of Hormuz a risky area. This uncertainty makes oil companies hesitant to purchase Iraqi crude. The price reductions are an attempt to make Iraqi oil more attractive to buyers. SOMO, the Iraqi state oil company, has not yet commented on the exact reasons for these deep discounts. However, the market understands the link to the geopolitical situation.

These lower prices could impact global oil prices. If more Iraqi oil becomes available at a cheaper rate, it might reduce demand for other, more expensive crudes. Ghana, which imports a significant amount of refined petroleum products, could indirectly benefit from lower global crude prices. However, the security situation in the Strait of Hormuz remains a key factor to monitor. Any further escalation there could disrupt global supply chains and drive prices up again. Decision-makers and traders will be watching closely for any changes in shipping routes or security measures in the region.