Iraq Offers Buyers a Way Around War-Torn Strait of Hormuz

Iraq's state oil marketing company, SOMO, has introduced a new tender term that allows buyers of Basrah Medium and Heavy crude to take delivery via ship-to-ship transfer near the Omani coast. This is the first time since the Iran war began in February 2026 that buyers have had this option without transiting the Strait of Hormuz.

The move aims to alleviate the pressure on Iraqi oil exports, which were severely impacted by the conflict. Before the war started, southern oil exports were running above 3.3 million barrels per day, but by May, that figure had collapsed to around 100,000 barrels per day due to buyers' refusal to send tankers into a live combat zone.

The new STS option shifts the risk from the buyer's vessel to the first-leg ship, making it commercially meaningful for refineries in Asia and Europe. The Strait of Hormuz is a critical waterway, and every barrel loaded at Iraqi terminals has to travel its full length before reaching open ocean.