According to WPB, Iraq has launched a prompt tender for 2 million barrels of Basrah Heavy crude to be delivered through a ship-to-ship transfer near the coast of Oman. The structure allows buyers to take delivery outside the Strait of Hormuz without sending their own long-haul tanker deep into the Persian Gulf for direct loading.
The cargo is being offered by Iraq’s State Oil Marketing Organization, SOMO, on an FOB basis for loading between September 27 and 30. Bids are due by September 24 and are expected to be submitted against the relevant pricing references for Basrah Heavy crude.
The importance of the tender lies not only in its 2 million-barrel size, but in the delivery structure itself. A buyer can receive the crude near Oman instead of sending a large tanker to Iraq’s southern terminals, waiting for loading and then making a second transit through Hormuz on the way out.
That distinction has become increasingly important in 2026. Tanker traffic through Hormuz remains below normal levels, while vessel availability, insurance costs and freight rates have all been affected by elevated security risks across the Gulf.
This is not the first time Iraq has used such a structure. In late August, SOMO had already offered Basrah Medium and Basrah Heavy with ship-to-ship delivery options near Oman, so the latest tender is better understood as another step toward making the arrangement a repeatable commercial tool rather than a one-off emergency measure.
What makes the September 23 tender particularly noteworthy is that it places a specific 2 million-barrel prompt cargo into the market with a clearly defined loading window. That gives traders and refiners a concrete example of how Iraqi crude sales are being adapted to a more complicated shipping environment.
There is, however, an important logistical point. Iraqi crude still has to move from southern export infrastructure through the Strait of Hormuz before reaching the transfer area near Oman, meaning the structure does not physically remove Hormuz from the barrel’s route.
What changes is the delivery point and the way shipping risk is divided. A regional shuttle tanker can carry the crude through the strait, while the buyer’s larger ocean-going vessel remains outside the Gulf and waits to receive the cargo.
For refiners and trading companies, that arrangement can be operationally attractive. The long-haul tanker no longer needs to enter the higher-risk Gulf environment, sail to Basra, wait for loading and then retrace the route through Hormuz before beginning its international voyage.
Instead, the receiving tanker can collect the crude outside the strait and continue directly toward Asia or another destination. The costs of the shuttle voyage, ship-to-ship transfer, insurance and waiting time still remain, but they are absorbed differently within the trade.
This advantage has helped drive rapid growth in ship-to-ship activity around Oman. The volume of crude moving through shuttle-based transfer networks was estimated at around 2.5 million barrels per day in September, compared with roughly 1.4 million barrels per day in August.
The system is no longer limited to one producer. Saudi Arabia has also moved part of its crude through transfer points near Oman, while the UAE has used its trading and tanker network to support regional cargo movements.
Iraqi crude had already entered this network before the latest tender. In September, a very large crude carrier carrying around 2 million barrels of Iraqi oil transferred its cargo near Fujairah to another VLCC bound for China.
The result is a gradual division of Gulf crude trade into two separate legs. One shorter regional leg carries crude through Hormuz, while the longer international voyage begins outside the strait after the cargo has been transferred.
That structure helps keep exports moving, but it comes at a high price.
Freight costs for large tankers linked to the Hormuz trade have risen sharply during the crisis. In some transactions, transport costs have exceeded $30 per barrel, fundamentally changing the economics of moving Gulf crude.
Ship-to-ship transfers add further expense. Two vessels must be coordinated at the same location, transfer equipment and safety procedures must be arranged, and the receiving tanker may spend significant time waiting offshore before the operation begins.
The main advantage is flexibility. For a producer such as Iraq, offshore delivery can widen the pool of buyers willing to consider a cargo when shipowners are reluctant to send their vessels into the Gulf.
This matters particularly for Basrah Heavy. The grade is a heavy sour crude with an API gravity of around 24 degrees and sulfur content of approximately 4.05%, making it most suitable for complex refineries capable of handling heavy, high-sulfur feedstocks.
Those characteristics also make the cargo relevant to the wider heavy-products market. Heavy crude can generate larger residual streams in appropriately configured refineries, and those streams may ultimately be directed into products such as fuel oil or bitumen depending on refinery design, economics and market demand.
That does not mean the 2 million barrels in this tender will necessarily become bitumen. Heavy residual material can move into several downstream products, and final yields depend on crude slate, refinery configuration, operating conditions and relative product margins.
The relevance to bitumen is therefore indirect but still meaningful. If heavy crude becomes more expensive or more difficult to move, the effect can feed into refinery feedstock costs, operating rates and the economics of producing heavy petroleum products.
There is currently no evidence that Iraq is using the same offshore transfer model for bitumen exports. Bulk bitumen requires a different logistics chain, including heated storage, specialized loading systems and dedicated vessels.
For that reason, the expansion of crude STS activity around Oman should not automatically be interpreted as the emergence of a new bitumen hub.
Even so, maritime infrastructure often develops first around crude and large petroleum flows. If transfer zones, storage capacity, support services and vessel traffic continue to expand around Oman, the area could become increasingly important for other petroleum products over time.
Oman’s geography is one of the main reasons the model works. Its coastline opens directly onto the Arabian Sea, allowing the receiving vessel to remain outside Hormuz while still taking delivery relatively close to Gulf production centers.
The structure also makes freight economics more complicated. A cargo delivered outside Hormuz may reduce risk for the final buyer, but the total logistics cost still includes the shuttle tanker, the risky transit through Hormuz, insurance, the offshore transfer itself and any waiting time.
For that reason, STS should be viewed more as a risk-management mechanism than as a cheap alternative route.
Earlier in the crisis, Iraq relied more heavily on steep discounts to keep crude flowing from its normal Gulf terminals. In August, discounts on some Basrah Heavy cargoes reached around $27.80–$29.80 per barrel in an effort to compensate buyers for the risk of sending tankers into the Gulf.
Shifting the delivery point toward Oman changes that equation. Instead of placing the entire burden of Hormuz risk on the buyer and offsetting it through deep discounts, part of the shipping problem can be managed before delivery by Iraq and its logistics partners.
The underlying structural problem, however, has not disappeared. Iraq’s southern exports remain heavily dependent on Gulf infrastructure, and the country does not currently have a large active pipeline capable of moving major crude volumes directly to an ocean coast outside Hormuz.
The shuttle-and-transfer model is therefore a practical workaround rather than a complete alternative to the strait.
The market will now watch the pricing and outcome of the September 27–30 cargo. If SOMO continues to issue similar tenders, it would provide stronger evidence that offshore Oman delivery is becoming a more regular part of Iraq’s crisis-era sales strategy.
Buyer participation will also be important. If refiners that had previously been unwilling to send their own tankers into the Gulf begin bidding for these cargoes, Iraq may be able to place more barrels without relying on the exceptionally deep discounts seen earlier in the conflict.
At the same time, more transfer operations could increase tanker demand around Oman. Each STS transaction requires both a regional shuttle vessel and a receiving tanker to be available at roughly the same time and place.
As volumes rise, vessel positioning, offshore waiting times and congestion around transfer areas could become a larger part of regional freight costs.
What is emerging is not a simple return to the pre-crisis trading model. Gulf producers are building a more complex network of regional shuttles, offshore transfers and multi-stage voyages to keep exports flowing under higher-risk conditions.
The 2 million-barrel Basrah Heavy tender does not create a new physical route that bypasses Hormuz completely, but it shifts the commercial delivery point outside the strait and reduces the need for the final buyer’s tanker to enter the Gulf.
If the model continues to expand, the Omani coast could play a larger role in receiving, transferring and redistributing Iraqi and other Gulf crude. That, in turn, could reshape tanker demand, regional freight and the logistics of Gulf oil trade.
No equivalent structure has yet been confirmed for bitumen. Even so, changes in crude-delivery geography, refinery feedstock security and regional shipping economics are likely to remain increasingly relevant to the bitumen and asphalt markets.
By WPB
Iraq Crude Oil, Basrah Heavy, SOMO, Oman STS, Ship-to-Ship Transfer, Strait of Hormuz, Iraqi Oil Exports, Heavy Crude, Crude Logistics, Tanker Freight, Oman Oil Hub, Gulf Shipping, Refinery Feedstock, Bitumen, Asphalt, Heavy Sour Crude
