Vitol Offers Iraqi Oil in Sign of Hormuz Transits

Vitol Group is offering Iraqi Basrah crude to customers, people with knowledge of the matter said, in a sign that some shipments may have successfully made it out of the Persian Gulf.

Vitol has offered cargoes to refiners in the past few days, with Basrah Medium and Basrah Heavy available on a ship-to-ship transfer basis in waters off the United Arab Emirates, including the port of Fujairah, according to the people, who asked not to be identified as negotiations are private.

A spokesperson for Vitol declined to comment.

If successful, this would be a rare instance of Iraqi crude being offered in the spot market and by traders since the war and blockade of the Strait of Hormuz began. For months, the bulk of Persian Gulf production has been stuck and unable to exit the region, with Abu Dhabi National Oil Co., or Adnoc, being among the first to move its oil out through the strait.

The number of supertankers hauling unsanctioned oil through the strait has shown signs of rising in recent days, according to ship-tracking data compiled by Bloomberg. Four vessels, each hauling 2 million barrels of mostly-Iraqi crude, have exited since May 10. That's still a fraction of pre-war rates, when about 20 or so tankers cross daily.

Shipments of Iraqi crude are loaded from ports located deep inside the Persian Gulf, with most cargoes supplied to companies with equity stakes in the nation's fields or long-term contracts with state-owned SOMO. The difficulties faced by buyers wanting to charter vessels to lift Basrah cargoes have prompted a plunge in exports, which in-turn affects SOMO's revenue, prompting the state marketer to offer discounts for crude loading this month.

This week, a vessel carrying Iraqi oil attempted to leave the Persian Gulf area, but abruptly cut short its journey toward Vietnam. The Agios Fanourios I was hauling 2 million barrels of Basrah crude when it U-turned near the US naval line outside the Gulf, the tanker-tracking data showed.

The Kiara M, meanwhile, exited the strait on May 10 after picking up an Iraqi cargo in late April, according to Kpler. It has since transferred her cargo onto another vessel via ship-to-ship transfer off Sohar.