Iraq offers larger discounts on oil sales in October

Oil tankers Tataki and Maran Aspasia fill at Al-Basrah Oil Terminal off Iraq’s Faw peninsula, Aug. 5, 2025. Photo: AFP Baghdad (IraqiNews.com) – Iraq’s State Oil Marketing Organization (SOMO) has significantly raised its discounts for term-contract buyers of October-loading crude oil. These significant price reductions are intended to encourage buyers to accept delivery of cargoes directly from Iraq’s southern terminals, despite the serious geopolitical transit blockades and increasing shipping risks. According to official marketing documents, price reductions have increased considerably in the past few months. Basrah Medium is currently offered at a discount of $34.50 per barrel compared to market benchmarks, while Basrah Heavy is available at a $37.00 per barrel discount. The current reductions are notably larger than the discounts offered in August and September, which were under $30 per barrel. More than 90 percent of Iraq’s crude shipments were halted after the closure of the Strait of Hormuz due to the military operations in the region. The discounts are an unprecedented concession to persuade purchasers to accept the security risks of sending oil tankers to the northern Arabian Gulf. Attacks on vessels have dramatically slowed maritime activities. The steep discounts are designed to offset rising chartering expenses and war-risk insurance costs, thereby attracting major commodities merchants like Vitol and national players like the UAE’s ADNOC to buy Iraqi crude. Since oil sales account for the vast bulk of Iraq’s national income, the Iraqi government has been compelled to aggressively increase discounting mechanisms to avoid production shutdowns and sustain state revenues.