Vitol Scoops Up 25 Million Barrels of Discounted Iraqi Crude

Vitol has secured at least 25 million barrels of Iraqi crude for September loading, making the world's largest independent oil trader Iraq's second-biggest buyer behind Abu Dhabi National Oil Co. (ADNOC). The purchases come as Iraq's State Oil Marketing Organization (SOMO) put September cargoes up for sale at steep discounts to official selling prices. A tender document reviewed by Reuters showed SOMO offered discounts between $15 and $20.80 per barrel, and trading sources indicated some cargoes fetched even larger markdowns. The price concessions are intended to overcome a logistics bottleneck: Iraq lacks a large tanker fleet and ships most of its crude from southern terminals inside the Persian Gulf. Tanker traffic through the Strait of Hormuz remains well below prewar levels, and freight rates have risen sharply as vessel owners demand higher premiums to enter the region. Buyers with substantial shipping and logistics capacity, such as Vitol and ADNOC, are therefore in a position to take up large volumes that Iraq cannot easily move itself. ADNOC agreed to buy about 40 million barrels for September after receiving an allocation of 32 million barrels in August, of which it ultimately lifted roughly 20 million. Reuters sources said Vitol's September purchases could be between 25 million and 30 million barrels. ADNOC has been rerouting crude through Fujairah and Sohar for resale, while Vitol operates a large trading and shipping network that supports the transport of purchased barrels. Iraq's exports from southern ports averaged about 2.35 million barrels per day in August and have increased to roughly 2.6 million bpd so far in September. In August, Iran began allowing some tankers carrying Iraqi crude to transit the Strait of Hormuz after requests from Baghdad. Separately, Iraq started a trial to move southern crude north toward Kirkuk for export via Turkey's Ceyhan port; that trial transported about 38,000 barrels over two days using 209 tanker trucks, while northern-route flows were running near 200,000 bpd.