Iraq Seeks Short-Term Fix with VLCC Charter Amid Strait of Hormuz Disruptions

The Iraqi Oil Tankers Co. (IOTC) has launched a tender to charter two or more very large crude carriers, known as VLCCs, for 180 days to keep Iraq's oil flowing through the Strait of Hormuz.

The tender is set to close around September 10-11, 2026, and it comes after Iraq's cabinet formally approved the tanker hiring effort on September 4.

Iraq's crude oil exports have plummeted by over 97% since late February 2026, when conflict-related disruptions tied to the Iran situation turned the Strait of Hormuz from a busy shipping lane into something closer to a no-go zone for commercial vessels.

The math behind the desperation is stark: SOMO, Iraq's state oil marketer, is now offering crude at discounts of $25 to $30 per barrel below Dubai benchmarks. Freight rates for chartering VLCCs have hit record levels, with recent charters reportedly costing $23 to $25 million to transport approximately 2 million barrels.

Iraq is far from the only producer affected, but its geography makes it uniquely vulnerable. Unlike Saudi Arabia, which has pipeline alternatives to bypass the strait, the vast majority of Iraqi crude must transit through Hormuz to reach international markets.